Markets had been showing signs of recovering from previous worries about the euro that carried the Dow Jones Industrial Average to below 10,000 earlier in the week. Earlier in the month, European officials also unveiled a nearly $1 trillion bailout package for the Greek economy that only seems to have provided brief relief to financial markets.
On Friday though, Fitch Ratings delivered a credit downgrade to Spain, re-igniting fear that a sovereign debt default by a European Union nation could still be a possibility. Spain is one of several European nations to announce austerity measures to bring deficits back down to a manageable level.
According to Fitch, Spain’s long-term issuer default rating fell from AAA to AA+. The downgrade was not particularly large in itself, and Fitch also cited a stable outlook for Spain.
However, markets remain highly sensitive to any perceived bad news from Europe and Spain has been cited for several months as one of the handful of EU members that could be facing a possible default as borrowing costs rise.
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