Euro downgrades send sharemarkets tumbling

Sovereign debt ratings downgrades in France and eight other euro-zone countries have sparked renewed global worries over Europe's ability to bail itself out of financial crisis.

Wall Street and European sharemarkets all fell on Friday after speculation about the downgrades, which were announced after the markets closed.

Standard & Poor's stripped triple-A ratings from France and Austria while downgrading seven others, including Spain, Italy and Portugal. The only country to retain the triple-A rating was Germany.

The downgrade to France, the eurozone's second-largest economy, will make it harder – and potentially more expensive – for the euro bailout fund to help troubled states, because the fund's own triple-A rating depends on those of its constituents.

The downgrades also come just when Greece is desperate for support. In Athens, talks broke down between Greece and a group of creditors negotiating to restructure its debt.

European stock markets tumbled ahead of the S&P announcement, with the benchmark Stoxx Europe 600 index finishing off 0.1% at 249.18 after rising as much as 0.7% earlier in the session,

The UK's FTSE 100 Index fell 1.2% to 5601.39, France's CAC-40 index shed 1.1% to 3166.32, and Germany's DAX slid 1.5% to 6087.

On Wall Street, the Dow Jones Industrial Average finished down 48.96 points, or 0.39%, at 12,422.06, after tumbling as many as 159 points on European downgrading reports.

The S&P 500 index dropped 0.5% to 1289.09, while the Nasdaq Composite declined 0.5% to 2710.67. Even so, the Dow was up 0.5% for the week and the Nasdaq tacked on 1.4%.

Asian sharemarkets finished mostly higher, with Japan's Nikkei Stock Average rising 1.4% and Korea's Kospi Composite gaining 0.6%. China's Shanghai Composite fell 1.3% to post a third consecutive loss.

The downgrades sent the euro sharply lower. After gaining against the US dollar, the euro reversed course, shedding 1.1% to trade at $US1.2677, its lowest close since August 2010.

Crude oil futures slipped 0.4% to $US98.70 a barrel while gold futures lost 1% to $US1630.40 an ounce.