French debt rating worry hits markets

NEW concerns over France’s debt levels plunged international stock markets downwards again yesterday, despite slightly more positive news beginning to emanate from the US.

Tuesday’s market gains — the first for a week — looked like gaining momentum in early trading yesterday, with the US Federal Reserve’s announcement that it would keep its interest rates at or near zero for two more years going someway to easing investor concerns.

However, early gains were wiped out and markets took another serious nosedive later in the day as speculation rose that France could be the next large economy to lose its triple A debt rating. While that country’s government denied such a move was imminent (President Sarkozy promising new measures to slash the French deficit) and the leading credit rating agencies reaffirmed their top ratings for France, markets closed the day well down on Tuesday’s gains.