Italy's credit downgraded

Italy's credit downgraded
Wednesday, October 5, 2011 - 6:58am

Moody's Investors Service has downgraded the Italy's bond ratings three notches to a two with a negative outlook.

Moody's said all European countries with ratings below AAA could face downgrades due to decreasing investor confidence in the ability of governments to handle the debt crisis.

Standard and Poor's cut its rating for Italy last month.

"It means markets are focusing very much on Italy's weaknesses now, having for a long time been reassured by its relative strength of its financial system,” says Gavin Jones, Reuters Chief Economics Correspondent. “Now they are looking at its political weakness and its inability to grow economically. It's a bad sign. It's a sign of a lack of confidence in Italy to solve its problems."

Italy is the euro zone's third largest economy and is now firmly at the center of the debt crisis.

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