Italy downgrade adds fuel to the European debt crisis

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In the latest move in the deepening European debt crisis Italy has had its sovereign debt rating cut by Standard & Poor's from A+ to A adding that the economic future for the country was "negative". Italy has Europe's second-largest debt level and the cost of that debt has been rising in recent weeks as lenders to Italy have become nervous about its ability to repay loans.

Italy follows Spain, Ireland, Greece, Portugal and Cyprus in having its credit rating downgraded this year and the unexpected announcement has increased pressure on an already weakened euro zone.

The problems in Greece continue and whether or not it will default on its loans hit markets hard yesterday. The Greek government is in talks with the International Monetary Fund about getting more bailout money released and is also suggesting it will put a referendum to the nation about whether it should remain in the euro. With one hundred thousand public sector jobs ear marked for cuts, many are bracing themselves for continued demonstrations and unrest.

All the uncertainty fuelled a tumble on global markets on Monday; Oil fell more than two percent and copper fell to a ten month low as mounting concern over the euro zone debt crisis exacerbated investor fears about the demand for commodities.

The currency markets have been hugely volatile over the past few weeks with GBP EURO seeing a high of 1.1714 on 12th September falling to around 1.1470 at time of writing.

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Italy downgrade adds fuel to the European debt crisis

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