MercoPress. South Atlantic News Agency

Modest gains in world markets waiting for the Greece’s Sunday election

Contained nerves in markets following possible coordinate action from major central banks

US stock were modestly higher as optimism over a possible coordinated action by major world central banks if Sunday's Greek election causes financial turmoil was tempered by a weak reading on domestic manufacturing.

The Dow Jones industrial average gained 53.81 points, or 0.43 percent, to 12,705.72. The Standard & Poor's 500 Index gained 4.05 points, or 0.30 percent, to 1,333.15. The Nasdaq Composite Index gained 5.35 points, or 0.19 percent, to 2,841.68.

European shares rose on Friday as expectations that central banks would intervene to deal with the risk of a Greek exit from the euro zone led to a recovery in financial stocks, which have fallen sharply on worries over their exposure to Greece.

The FTSEurofirst 300 index rose 0.8 percent to 991.96 points. Germany's DAX rose 1 percent while France's CAC-40 index advanced by 1.6 percent.

Japan's Nikkei share average ended flat on Friday as a risk-off atmosphere pervaded ahead of a pivotal election in Greece, but losses were tempered by an overnight report that central banks were prepared to offset potential market turmoil.

Meanwhile Moody's cut the ratings of eleven European banks and said it would cut again if Greece ditched the euro, kicking off a long-awaited round of downgrades for major European institutions.

Moody's Investors Service said it had taken action against five Dutch banking groups, three French banks and one each from Belgium and Luxembourg.

Moody's cut four Dutch banks by two notches with one moved a single step lower. It kept a negative outlook for Dutch bank and insurer ING Bank, one of those cut two notches, meaning the rating could be cut again. ING received 10 billion euros in state aid during the 2008 financial crisis.

“Today's actions reflect Moody's view that Dutch banks will face difficult operating conditions throughout 2012 and possibly beyond,” it said.

Moody's agency said it had cut the ratings by two notches to Aa2 for Rabobank Nederland RABOO.UL, to A2 for ING, to A2 for ABN AMRO Bank ABNNV.UL, and to Baa2 for LeasePlan Corporation LEASP.UL.

The long-term debt and deposit ratings for SNS Bank, owned by SNS Reaal, were cut one notch to Baa2. Short-term ratings for all the groups were unchanged.

Moody's said while it had factored in an increased risk of Greece leaving the euro area, this was not its central scenario. “If a Greek exit became Moody's central scenario, further rating actions on European banks could well be needed.”

Moody's also cut ratings for French groups Banque Federative du Credit Mutuel, BPCE and CIC, and also KBC from Belgium, and Banque et Caisse d'Epargne de l'Etat from Luxembourg. “To date, we have taken actions on banks in Germany, Austria, Spain, Italy, Portugal, Sweden, Norway, Denmark and Finland,” it said.