European markets fell at the start of trading before levelling off Monday morning, the first day of trading since nine eurozone nations – including France and Austria – were downgraded by Standard and Poor's ratings agency late Friday.
French President Nicolas Sarkozy on Sunday tried to assuage French upset over the downgrade of its credit rating from the top-notch AAA, and said that more reform is the key to leading France out of the crisis.
Joaquin Almunia holds one of the most influential portfolios in the Commission. As the EU’s antitrust regulator, he is responsible for guaranteeing fair competition across the EU. The Spanish Commissioner reacts to the downgrade of France’s sovereign debt rating, the possible merger of Deutsche Boerse with NYSE Euronext, and the rise of protectionism.
France will respond to its credit rating downgrade by pushing through budget cuts, PM François Fillon (pictured) said on Saturday. Earlier, Socialist presidential candidate François Hollande blamed the downgrade on President Sarkozy's policies.
Standard and Poor's ratings agency downgraded France's AAA rating by one notch to AA+, French Finance Minister François Baroin confirmed on Friday. Austria also lost its top credit rating while Italy was downgraded two notches to BBB+.
European stocks fell and the euro dropped to a 16-month low against the dollar Friday on rumours that the Standard & Poor's ratings agency is planning to downgrade several eurozone nations, including France.
The first Spanish bond auction of 2012 raised €10 billion on Thursday – double its initial target – and Italian bond yields fell to their lowest level since June, prompting European markets and the euro to consolidate gains.
France successfully raised 7.963 billion euros ($10.23 billion) when it sold debt Thursday, but was forced to pay higher interest amid fears the country could lose its AAA credit rating.
The euro and European markets sank Wednesday on concerns about the lack of policy movement at the US Federal Reserve and Italy’s high borrowing costs. The euro sank to below $1.30, its lowest level in almost a year.
British Finance Minister George Osborne said on Saturday that the UK was protecting its interests by opting out of the fiscal plan for the EU, adding that much work still needed to be done to stabilise the euro.
