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TORONTO (Reuters) - Ratings agency Standard and Poor's affirmed Canada's AAA rating on Friday and lauded the country's strong finances compared with its Group of Seven peers.
The review stood in sharp contrast to growing pressure on the ratings of many Western countries, highlighted by this week's downgrade to Greece's sovereign debt by Moody's Investors Service.
Standard & Poor's affirmed Canada's AAA long-term and A-1+ short-term sovereign credit ratings with a stable outlook.
"Canada has what we view as strong public finances, a relatively diversified economy, stable public policy, and a sound financial sector," the agency said in a statement.
"The stable outlook reflects our opinion that Canada has the political capacity and will to respond quickly to changing conditions, and the strongest fiscal position of the five 'AAA' rated G7 sovereigns."
The other G7 nations with AAA ratings are the United States, France, Germany and Britain.
S&P cut the outlook on Britain's AAA rating to "negative" on May 21, 2009, a move that typically carries a one in three chance of a downgrade.
Some analysts have speculated the top-tier credit rating of the United States could be cut one day, an idea rejected by U.S. Treasury Secretary Timothy Geithner.
Canada's Conservative government, in presenting its annual budget last month, pledged to turn off the stimulus tap and curtail spending sharply after the economy recovers.
"We expect the prevailing consensus on the need for robust public finances, across Canadian regions and political parties, to avoid a return to recurring, structural deficits, in the medium term," S&P said.
The agency also said Canada's financial system is well-developed and sound. The nation's banks did not require government bailouts during the economic crisis and have been ranked as the world's soundest by the World Economic Forum.
Reporting by Jeffrey Hodgson; editing by Rob Wilson