Friday 17.45 BST. An improvement in global risk appetite is ebbing after Fitch downgraded Italian and Spanish debts, with traders hardly buoyed by a positive but not ebullient US employment report.

Fitch joined other ratings agencies in lowering Spain’s credit rating by two notches, and cutting Italy’s by one notch – and, for good measure, saying it was still negative on the outlook for Portugal’s debt. The agency said that the worsening crisis may erode confidence in Italy’s banks, and that Spain’s annual economic growth would remain below 2 per cent through 2015.

That cut short a broad but shallow rally in risk appetite, which had led to 10-year Treasury yields rising double digits and the dollar falling in value. The price of crude oil is down for the session, and US stocks are also adding to losses. The S&P 500 index is down 0.8 per cent to 1,155 in midday trading.