Futures held onto small gains Tuesday as optimism over a possible resolution to the euro zone debt crisis was tempered by a warning from ratings agency S&P’s that it could downgrade the credit ratings of 15 euro member states.
S&P placed the ratings of 15 euro zone countries on credit watch negative—including those of top-rated Germany and France, the region's two biggest economies—and said "systemic stresses" are building up as credit conditions tighten in the 17-nation region. The remaining two members of the euro zone, Portugal and Greece, have already had their credit ratings downgraded to junk.
The warning came after French President Nicolas Sarkozy and German Chancellor Angela Merkel announced they had agreed a plan for a revised European treaty which they plan to put to a summit of European leaders on Friday. The plan would either seek to revise the current Lisbon Treaty, or would lead to an entirely new treaty, and would include sanctions for member states who fail to keep within strict budgetary rules on deficit limits. The plan also calls for the European Stability Mechanism to be brought forward by a year so that it is in place in 2012.
On Wednesday, Sarkozy will meet U.S. Treasury Secretary Timothy Geithner in Pairs, whose fourth trip to Europe since early September reflects U.S. concern about the euro zone.Page 1 of 3 | Next Page