The Bank of England has resisted injecting further emergency liquidity to the UK economy as optimism over finding a solution to the Euro zone debt crisis grew.
Italy is hugely exposed to the risk of contagion from the debt turmoil in the euro zone, said Prime Minister Mario Monti, suggesting the European Central Bank take action to help cool borrowing costs.
Rating agency Moody's announced on Tuesday it had downgraded six European nations including Italy, Spain and Portugal, citing growing risks from Europe's debt crisis, and warned it may cut the triple-A ratings of France, Britain and Austria.
A rise in interest rates on French government debt and weaker growth prospects could be negative for the outlook on France's credit rating, Moody's warned in a report released Monday, adding to pressure on European debt markets.
As technocrats leaders in Italy and Greece rush to form governments as they sought to limit the damage from the Euro zone debt crisis – and the Euro climbed on relief that a key Italian bond auction drew decent demand from investors – German chancellor Angela Merkel stepped up to defend Europe’s common currency.
Asian stocks fell on Friday, following the trend on global markets, on continuing worries that the US economy could slide back into recession and the Euro debt crisis remains latent.
Asian shares were mixed on Thursday as fears about the European debt crisis overshadowed the region's growth prospects. Japan's Nikkei 225 index was down 1.3%, with Hong Kong's Hang Seng also dropping by 1.5%.