Arab Today, arab today euro plummets as french downgrade looms
Last Updated : GMT 03:52:24
Arab Today, arab today
Arab Today, arab today

Euro plummets as French downgrade looms

Arab Today, arab today

Arab Today, arab today Euro plummets as French downgrade looms

Paris - AFP

Efforts to save the eurozone economies suffered a double blow Friday as major player France lost its triple-A debt rating and talks to agree a Greek debt writedown collapsed. The single currency plunged to 16-month lows, and European stock markets slid back sharply after opening up on what proved a grim Friday 13th for EU policy makers, in particular France\'s President Nicolas Sarkozy. In Brussels, EU government sources told AFP Standard and Poor\'s had warned the bloc that France would be downgraded by one notch, while fellow top-line creditors Germany, Luxembourg, Finland and the Netherlands would be spared. It was not clear what would happen to the other triple-A economy in the 17-nation eurozone, Austria. S&P had put 15 of the bloc\'s members on warning that it was reviewing their rankings in the light of the debt crisis. \"France is losing its triple-A,\" one of the sources said. The rating agency warned last month that a cut of two notches could be imposed on the eurozone\'s second biggest economy, but officials said only one was expected. The downgrade could force France\'s borrowing costs up at a time when it has already been forced to implement a package of austerity measures to control its deficit, and was a political humiliation Sarkozy. Sarkozy -- who hosted crisis talks with his top economics ministers at the Elysee -- faces a tough re-election battle in less than 100 days and reportedly told allies last month: \"If we lose the triple-A, I\'m dead.\" France\'s budget minister and government spokeswoman Valerie Pecresse refused to confirm the imminent downgrade, insisting \"France is a safe investment\", but Sarkozy advisor Henri Guiano admitted it was \"bad news ... if true\". Socialist lawmaker Jean-Marie Le Guen branded the loss of the triple-A \"a triple failure for Sarkozy\", amid charges from the left that the president\'s tax cuts had left France more exposed than its neighbours. Far-right flagbearer Marine Le Pen called for France to quit the euro and declared the downgrade had \"destroyed the myth of the president as protector.\" The single currency fell back to $1.2638, a 16-month low, while London\'s FTSE 100 closed down 0.46 percent, Frankfurt\'s DAX closed down 0.58 percent and in Paris the CAC 40 dropped 0.11 percent by the end of trading. American stocks also fell on opening. S&P was expected to confirm the downgrade after Wall Street closes at 2100 GMT. And there was further bad news from debt-wracked eurozone minnow Greece, when a group representing major private lenders said they had failed to reach an agreement to slash its debt burden. Talks on a Greek write-down have \"not produced a constructive consolidated response by all parties,\" the Institute of International Finance said. The proposed deal would have seen banks taking a 50-percent \"haircut\" on Greek debt, which would remove about 100 billion euros ($127 billion) from Athens\' massive burden and avoid a full-blown default. \"Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach,\" the IIF said, in a statement issued in Washington. \"There is extreme tension,\" a source in Athens confirmed to AFP. \"All parties involved in this crucial negotiation ought to be aware of this very grave condition and assume their responsibilities to avoid the worst.\" European shares and the euro had been climbing before reports began. \"The markets are in a delicate situation at the moment and, as with all delicate situations, investors need to tread carefully,\" Spreadex trader Simon Furlong told AFP. \"Any further downgrades to eurozone countries, especially ones of the likes of France and Germany would be a devastating blow for European leaders ahead of the European summit at the end of the month.\" European leaders are due to meet in Brussels on January 30 to nail down details of a fiscal pact designed to reassure bond markets that their deficit reduction plans are on course and their debts safe. Earlier Friday, Italy raised 4.75 billion euros ($6.09 billion) at mostly lower rates in a bond auction, reflecting what was then still improved market confidence and European Central Bank efforts to boost eurozone liquidity. German Foreign Minister Guido Westerwelle said he would travel to Greece on Sunday, taking with him a message of \"encouragement\" and \"expectation\". Meanwhile, German Chancellor Angela Merkel\'s spokesman said she would host the leaders of Portugal, Sweden and Austria next week for informal talks on the eurozone debt crisis and fiscal integration. Borrowing by Spain\'s struggling banks from the European Central Bank hit a 17-month high in December as it offered cheap long-term loans to the eurozone, the Bank of Spain said.

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Arab Today, arab today euro plummets as french downgrade looms Arab Today, arab today euro plummets as french downgrade looms

 



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