Stock exchange traded funds opened higher Thursday following a volatile premarket session on lingering worries over the Eurozone debt crisis.
SPDR S&P 500 ETF (NYSEArca: SPY) was up 0.7% in early trading.
In Europe, France’s CAC 40 and Italy’s FTSE MIB were down more than 1%.
The iShares MSCI France (NYSEArca: EWQ) fell 7% on Wednesday, and French banks such as Societe Generale remained under pressure on Thursday. [France ETF Falls on Downgrade, SocGen Talk]
European markets were volatile after Reuters reported one bank in Asia has cut credit lines to major French banks. Stock markets in Germany and the U.K. were also in the red Thursday.
Investors are worried Europe’s debt contagion is spreading to France, the region’s second-largest economy.
Adding to the unease, Bank of America Merrill Lynch analysts downgraded European banks.
“As long as EU peripheral debt issues remain in the headlines despite the best efforts of the ECB, banks will likely remain a focal point for negative risk appetite and we believe this will weigh against optically cheap valuations and low investor positioning,” the analysts wrote in a research note, which downgraded the sector to neutral, according to a CNBC.com report.
iShares MSCI France
