Comprehensive euro zone deal "beyond reach": Fitch
By Gavin Jones and Stephen Brown
ROME/BERLIN (Reuters) - A comprehensive solution to the euro zone debt crisis is beyond the region's reach, rating agency Fitch said, warning that six of its economies including Italy and Spain could be hit with credit downgrades in the near future.
The warning late Friday, the second time in two weeks that the bloc has been threatened with multiple ratings markdowns, heightened pressure on leaders to get to grips with the turmoil.
Fitch also said it might also cut AAA-rated France within two years and urged the European Central Bank to take a more active firefighting role.
One ECB policymaker said Saturday that time was running out to come up with solutions to a crisis that could spark a global slump. Another said the bank would not expand the bond buying program it launched to keep a lid on vulnerable states' debt costs.
Underscoring tensions within the bloc, a week after a key EU summit failed to reassure financial markets the crisis was being tackled, Italy's Prime Minister Mario Monti urged EU policymakers Friday to beware of dividing the continent.
ECB ratesetter Erkki Liikanen said that, to prevent a flurry of ratings downgrades and a credit freeze, the continent's leaders needed to act fast to beef up the rescue funds designed to provide a safety net for debt-laden member countries.
"The worse scenario is that the negative cycle continues, uncertainty grows, which would lead to a global recession," Liikanen - a member of the bank's governing council -told Finnish public broadcaster YLE in an interview Saturday.
International Monetary Fund head Christine Lagarde had said no country was immune from the crisis and each needed to act to head off the risk of a global depression. Continued...