S&P plays politics prior to EU-summit;

EURO countries

downgraded

On the eve of the EU summit Thursday and Friday the US rating agency Standard and Poor has created new panic in the markets by downgrading all members of the EURO including Germany and France. Germany is loosing its triple A rating and France is degraded to AA. All EURO-countries are set under immediate economic surveillance. The S&P decision would put increased pressure on banks and bigger companies also threatened by downgrading.

The news came just hours after Sarkozy and Merkel in a joint press conference announced agreement on how to tackle the Euro-zone crisis. France and Germany are proposing a revision of the European Treaty to be ratified by member states by March 2012. A part of the package is introduction of stronger budget discipline whereby immediate sanctions are going to be taken against member countries not following its obligations. Monthly EU- meetings at top level is also included and a more effective mechanism for the rescue of troubled sovereign economies.

The package was well received by the market. Europe and the US rose till S&P spoiled the party in late US-trading. After listing impressing gains over the last weeks the Asian exchanges are steeply down. Oil prices are falling as precious metals. Gold is falling 40 dollar from inter day high on yesterday.

The downgrading has put the Euro under increased pressure. Euro/USD is 1.3377. Speculators are watching the EURO drama, and it is expected that the EURO shall be under constant attacks for weeks and months to come.

Japanese Yen is strengthened and trading at 77,76 against the dollar.