The initial enthusiasm over Friday’s European deal was starting to give way to concern on Monday. Euro-zone nations committed Friday to an inter-governmental treaty that will make tougher fiscal rules binding and will include automatic sanctions against budget sinners.
While these medium-term measures have been generally welcomed, many analysts note that the measures fail to address the short-term problems of high borrowing costs for heavily indebted euro-zone nations such as Italy.
Moody’s Investors Service said Monday it still intends to revisit the ratings of all European Union countries during the first quarter of 2012, given “the continued absence of decisive policy measures.” The ratings company said the announcement from last week’s summit “offers few new measures and points out that many are similar to previously announced ones.”
A successful Italian bond auction didn’t do much to boost sentiment. Italy’s Treasury sold 7 billion euros ($9.4 billion) of 12-month bills on Monday. It received bids totalling €13.5 billion and the average yield fell to 5.95% from 6.09% at a previous sale.
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