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Business

Fitch agency eyes US ratings downgrade, triggers market jitters

As the United States stand hours from a fateful fiscal default, Fitch ratings agency has said it is reviewing the country’s credit rating for a downgrade. As a result, stock markets have fallen across Asia and Europe.

The United States triple A credit rating was put on negative outlook as the political gridlock over the US debt ceiling has raised the threat of a default on the nation's debt, Fitch credit ratings agency announced Tuesday.

“The political brinkmanship and reduced financing flexibility could increase the risk of a US default, the US-based agency said in a statement.

The announcement came as Washington faces a Thursday deadline to raise the nation's $16.7 trillion (12.3 trillion euros) borrowing limit. But US congressional leaders have so far failed to strike a bipartisan compromise to hike the debt ceiling.

Fitch said it expected Congress to find a solution soon, adding it planned to complete the US ratings review within six months.

On Tuesday, a spokesman for the US Treasury Department said Fitch's announcement reflected the urgency with which Congress should act to remove the threat of a default hanging over the economy.

Markets in jitters

Fitch's announcement triggered renewed unease in financial markets on Wednesday. In Asia, stocks fell as investors kept an eye on the American impasse.

In Tokyo, the benchmark Nikkei 225 index gave up early gains to slip 0.16 percent, while stocks in Hong Kong eased 0.39 percent.

European stocks also declined in early trading Wednesday giving back some of the previous day gains. The pan-European FTSE Eurofirst 300 fell 0.4 percent to 1,258.25, having gained 0.9 percent on Tuesday.

Germany's DAX index fell back 0.17 percent, coming down from a new all-time high posted on Tuesday.

uhe/hc (AP, Reuters, dpa)