09:31
European stock markets shrugged off fears of panic on Monday morning, with the Spanish and Italian stock indices rising as their government's debt costs fell.
The Italian FTSE MIB index was up 2.8% this morning, while Spain's Ibex 35 rose 2.6%, defying predictions of a heavy selloff following S&P's downgrading of the US credit rating on Friday night.
In the City, the FTSE 100 fell 66 points at the start of trading this morning, but swiftly reversed as traders become more confident. By 8.25am the blue chip index was in positive territory by 8:25, up 18 points at 5,265 as widespread fears of further panic selling on the markets failed to materialise.
Italy and Spain's borrowing costs also fell, after the European Central Bank said it would intervene by buying up the two countries' debt. Bond yields were down to 5.6% for Italy and 5.7% for Spain, though traders suggested the falls may not last.
Yields on 10-year Italian and Spanish bonds had spiked last week, rising above 6%, as Eurozone debt fears spread from the currency area's peripheral states towards the centre.
The French CAC index rose 1%, while the German Dax was up 0.1%. There had been fears that the US debt downgrade late on Friday night might accentuate last week's sell-off in global markets.
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