France

Ratings agency Standard & Poor's (S&P) was last night at the centre of a storm after it accidentally downgraded France's AAA rating.

Fears of France and Spain being the next to suffer in the eurozone debt crisis intensified as 10-year bond spreads reached euro-era highs above German yields yesterday.

The loss of France's AAA-rating would be a worse scenario for the global economy than the downgrade of the US, said Ignis chief economist Stuart Thomson.

France has slashed growth expectations for next year in a move which will boost fears about the lack of economic activity in Europe.

Standard & Poor's last night warned it is likely to downgrade the sovereign debt credit ratings of France, Spain, Italy, Ireland and Portugal if the economic slowdown intensifies.

Dexia, the bank bailed out by the French, Belgian and Luxembourg governments, loaned €1.5bn to two of its investors who then used the cash to buy shares in the company, it has been claimed.

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Germany has cut its economic growth forecast over fears its exports will slow, the BBC reports.

Credit agency Moody's has cut the rating of Spanish government bonds by two notches, echoing Standard & Poor's decision two days ago.

Rating agency Moody's has issued a warning on France's AAA-credit rating, saying it may downgrade its outlook for the country based on its overstretched budget.