Europe wobbles again

The European debt crisis has flared up once more after credit-ratings agency Standard & Poor's downgraded nine eurozone countries and their bail-out fund.

"New fires are breaking out once more," says FxPro.com. Credit-ratings agency Standard & Poor's (S&P) has downgraded nine eurozone countries' debt, stripping France and Austria of their triple-A ratings. S&P has also downgraded the European Financial Stability Facility (EFSF), the eurozone rescue fund, as the money it is raising in the markets is supposed to be backed by guarantees from core countries, including France and Austria. The EFSF's loss of its triple-A rating means it will be even harder to top it up. It is currently too small to rescue Italy and Spain.

All this, however, had already been largely factored in. As usual, says Joachim Fels of Morgan Stanley, official downgrades are "lagging fundamental developments". The real worry now is Greece, where talks on a debt deal were suspended last week, "making disorderly default more likely", says Jeremy Warner on Telegraph.co.uk.

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