BLBG:Euro Pares Advance Amid Reports Fitch Will Cut Italy’s Rating Two Levels
The euro pared gains versus the dollar and yen amid reports that Fitch Ratings may cut Italy’s credit rating by two levels by the end of January.
The 17-nation euro was within one yen of a 11-year low against Japan’s currency. Fitch lowered the outlook on France’s AAA credit rating last month and put countries including Spain and Italy on review for downgrades, citing Europe’s failure to find a “comprehensive solution” to the debt crisis. The cuts for Italy may come by the end of the month, news agency Ansa reported today, citing Alessandro Settepani, a senior Fitch director, who spoke at a conference in Milan.
“There seems to be a reaction to the Fitch headline saying the downgrade of Italy is an option,” and that is hurting the euro, said Chris Walker, a currency strategist at UBS AG in London. “It is clearly a bit of an overreaction since these cuts have been well flagged.”
The euro traded at 97.82 yen at 8:52 a.m. in London from 97.85 yen yesterday in New York, after earlier rising as high as 98.24. The common currency fell to 97.04 yen on Jan. 16, the weakest level since December 2000. The euro was at $1.2754 from $1.2736. The dollar depreciated to 76.71 yen from 76.83 yen.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net
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