FTSE opens 2% higher after Dow sheds 500 points on French fears

The FTSE opened more than 2% higher on Thursday after the Dow Jones shed 520 points lower in overnight trading amid concerns that France would become the next economic superpower to lose its AAA rating.

London's leading index was up 1.5% at 8:37am at 5,082.

Overnight, the Dow saw its fifth straight day of a rise or fall of more than 400 points to close at 10,719, a loss of 4.6%.

New York's broader S&P 500 index fell almost 52 points, or 4.42%, to 1,120.72.

On Wednesday, France's Cac 40 share index ended 5.5% lower despite the French government's assurance that its AAA credit rating was not under threat.

While agencies Moody's, Standard & Poor's and Fitch reaffirmed France's rating, analysts said investors were sceptical about the strength of the country's banking sector.

Societe Generale, France's second largest lender, fell as much as 20% after it was forced to "categorically" deny it was under financial pressure. The shares ended 15% lower.

In the US, Bank of America lost almost 11% to 6.77 while Walt Disney shed more than 9% to close at 31.54.

Asian shares were mixed as fears about France's credit rating overshadowed the region's growth prospects.

Japan's Nikkei 225 index was down 0.8% having earlier been 1.3% lower, with Hong Kong's Hang Seng also dropping by 0.9%.

However, South Korea's Kospi was up 1%, reversing an earlier decline of close to 4%, and Australia's ASX index also recouped earlier losses.

Gold prices also hit a new record of $1,801 as investors ploughed into the perceived safe haven.

On Wednesday, London's FTSE fell by 158 points to 5,007, taking £41bn off the value of the index. It has now lost almost 15% in the last nine trading sessions.

Banking shares were hit, with Barclays down 8.7%, Royal Bank of Scotland 7.3%, and HSBC 5.3%.