European stocks pared their decline, after yesterday completing the biggest two-day drop in eight months.

Germany, the Netherlands and Luxembourg had the outlooks for their Aaa credit ratings lowered to negative by Moody’s Investors Service after markets closed yesterday. The ratings company cited the risk that Greece will leave the 17-nation euro currency and the “increasing likelihood” of collective support for European countries such as Spain and Italy, according to a statement.

A composite index for the euro area’s manufacturing and services industries held at 46.4 in July.

Elan tumbled 13 percent to 9.63 euros, its biggest slide in almost a year. The company’s experimental Alzheimer’s treatment with Pfizer Inc. and Johnson & Johnson failed to improve symptoms of dementia in the first of four pivotal studies testing the drug.

Swatch rose 2.2 percent to 369.50 Swiss francs. The biggest maker of Swiss watches reported first-half profit that beat analysts’ estimates as sales of Omega and Longines timepieces to Chinese consumers increased. Net income rose to 720 million francs ($726 million) from 575 million francs a year earlier, the Biel, Switzerland-based company said in a statement.

FTSE 100 5,534.96 +1.09 +0.02%         

CAC 40 3,097.09    -4.44 -0.14%          

DAX 6,409.83         -9.50 -0.15%