249 lines
6.3 KiB
Plaintext
Executable File
249 lines
6.3 KiB
Plaintext
Executable File
finance
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financialcrisis
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8210195
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-----
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# Ireland downgrade knocks world markets
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## World markets fell as investors took to the sidelines after a sharp
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downgrade of Irish debt highlighted the lack of unity in Europe over how to
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deal with the escalating debt crisis.
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![Ireland downgrade knocks world markets. Ireland's prime minister Brian Cowen
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faced more bad news today when Moody's downgraded Ireland five notches to
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Baa1.][1]
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Ireland's prime minister Brian Cowen faced more bad news today when Moody's
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downgraded Ireland five notches to Baa1. Photo: Reuters
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5:18PM GMT 17 Dec 2010
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[Comments][2]
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Major markets in Europe and the United States lost ground, with London's FTSE
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100 closing down 27 points - or 0.16pc - at 5871.75, Germany's DAX sliding
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0.6pc, and France's CAC losing 0.5pc.
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The Dow Jones was trading 0.2pc lower, despite the Conference Board's index of
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leading economic indicators rising 1.1pc last month -- the biggest increase
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since March and a sign that the world's biggest economy will strengthen early
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next year.
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Moody's cut its evaluation of Ireland's creditworthiness by five notches to
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Baa1 and warned further downgrades could follow if Dublin was unable to
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stabilise its debt situation.
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"The Irish downgrade was significant and severe," said Nick Stamenkovic, bond
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strategist at RIA Capital Markets in Edinburgh. "The timing of it is a bit of
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a surprise, since Ireland has just passed the bailout. The decision by Moody's
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is very procyclical."
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The downgrade hit banking shares, with part-nationalised British bank Lloyds
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falling in London after it warned it would take a further hit from impairments
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on its Irish portfolio as a result of Ireland's economic and fiscal deficit
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problems.
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## Related Articles
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* [ECB doubles capital base to stem Spanish crisis][3]
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17 Dec 2010
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* [Portugal and Spain seen as riskier after Irish downgrade][4]
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17 Dec 2010
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* [Spanish debt auction pushes borrowing costs to decade high][5]
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16 Dec 2010
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* [Germany defiant as Europe suffers][6]
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16 Dec 2010
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* [United front by Merkel, Sarkozy hits euro, push up bonds yields][7]
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10 Dec 2010
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* [EU agrees to create permanent financial saftety net][8]
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17 Dec 2010
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"The eurozone crisis will still be a major focus for the next two or three
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months," said Mark Bon, fund manager at Canada Life in London.
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Financial markets, which have been waiting for decisive action from the
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European Union on euzozone sovereign debts, got no answer from the leaders of
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the 27 EU nations on Thursday night. While they **[agreed to create a new
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crisis resolution mechanism][9] **to kick in after 2013, they did not agree on
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any measures to ease the debt crisis now.
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Germany and France, the region's paymasters, are opposed to increasing the
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current bailout fund and have rejected the notion of creating European bonds.
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"The reality for markets is that little concrete has been delivered," said
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Daragh Maher of Credit Agricole CIB.
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After Ireland's credit rating was slashed, German borrowing costs fell and
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those in the countries seen as next in line in Europe's debt crisis, such as
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Spain and Portugal, rose as investors opted for safety.
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"The market's very much got Portugal and Spain in its sights," Mr Stamenkovic
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said. "The market's in a pretty jittery mood."
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Yesterday, the European Central Bank (ECB) yesterday said it would double its
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capital base to €10.76bn to cope with "credit risk" stemming from the eurozone
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debt crisis. This was seen as paving the way for direct action to shore up the
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Spanish debt markets if necessary.
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Eurozone members will provide the increase.
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[X][10] Share & bookmark
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Delicious Facebook Google Messenger Reddit Twitter
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Digg Fark LinkedIn Google Buzz StumbleUpon Y! Buzz
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[What are these?][11]
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* Share: [Share][10] [ ][12] [ ][13]
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[Tweet][14]
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http://www.telegraph.co.uk/finance/financialcrisis/8210195/Ireland-downgrade-
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knocks-world-markets.html
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Telegraph
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## [Financial Crisis][15]
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* ### [Ireland »][16]
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* ### [Spain »][17]
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* ### [Finance »][18]
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* ### [Economics »][19]
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* ### [Markets »][20]
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In finance
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[![Truncheon-wielding police in Barcelona have clashed with protesters at a
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makeshift camp that is one of dozens erected in Spain to protest at high
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unemployment][21] ][22]
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### [Spanish anti-crisis protests][22]
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[![Thousands of protesters occupy Puerta del Sol square in Madrid][23] ][24]
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### [Huge protests in Madrid][24]
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[![Riot police use tear gas as protesters throw petrol bombs in Athens][25]
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][26]
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### [Tear gas and petrol bombs][26]
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[![Irish bank stress tests: the key points][27] ][28]
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### [Irish bank stress tests: key points][28]
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[![Q&A: What is the Independent Commission on Banking?][29] ][30]
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### [Q&A: What is the Independent Commission on Banking?][30]
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[X][10] Share & bookmark
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Delicious Facebook Google Messenger Reddit Twitter
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Digg Fark LinkedIn Google Buzz StumbleUpon Y! Buzz
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[What are these?][11]
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Share:
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* [ ][10]
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* [ ][12]
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* [ ][13]
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* [Tweet][14]
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* Advertisement
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![][31]
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telegraphuk
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Please enable JavaScript to view the [comments powered by Disqus.][32] [blog
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comments powered by Disqus][33]
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[![][34]][35]
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Advertisement
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[Market Data »][36]
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sponsored features
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1. [What happens when Greece defaults][42]
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