TIMES ONLINE: Spain's debt has been downgraded in a further widening of Europe’s government debt crisis.
The move follows its reductions yesterday of Portugal and Greece, which sent shock waves through world markets.
Standard & Poor’s said its decision to downgrade Spain’s credit rating by one notch to AA from AA+ is due to its expectation that the country will suffer an “extended" period of subdued economic growth.
“We now believe that the Spanish economy’s shift away from credit-fueled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed,” S&P credit analyst Marko Mrsnik said.
The euro dived to another one-year dollar low of $1.3129 following the announcement, reaching a level last seen in late April 2009.
The FTSE 100 index, which had largely recovered its losses by early afternoon as fears about Greece's debt contagion eased, fell 16.91 points or 0.3 per cent to 5,586.61. Germany’s DAX and France’s CAC 40 fell between 0.3 and 1.5 per cent. Spain’s IBEX index fell 3 per cent and Portugal’s PSI 20 was down 1.9 per cent.
Earlier today the European Commission called on credit rating agencies to act responsibly after Standard & Poor’s downgraded Greece’s debt to junk status, sparking a widespread sell-off across world markets. Read on (+ video) >>> Emily Ford, Carl Mortished, David Wighton | Wednesday, April 28, 2010
