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Fitch reassures France on AAA rating

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07:46 CET+01:00

Ratings agency Fitch provided some relief to the French government on Tuesday when it said the country looked unlikely to be downgraded from its prized triple-A rating in 2012.

"In the absence of important shocks that could be linked to a strong worsening of the situation in the eurozone, Fitch does not foresee modifying its negative outlook before 2013," a spokesman said.

The news sent stock prices in Paris higher with the CAC40 index closing up 2.66 percent.

The news marked a positive shift in tone after Fitch changed its outlook for France in December from "stable" to "negative."

There was worse news for Italy as the agency said it could see its credit rating cut this month.

"Italy is the front line of this crisis," said David Riley, the head of global sovereign ratings at Fitch. 

France has embarked on a round of budget cuts to try to preserve its AAA-rating while ministers have continued to insist that a rating cut would be unwelcome but manageable. 

President Nicolas Sarkozy said in December that a cut would be "another difficulty, but not an insurmountable one."

Meanwhile, the head of the French central bank provoked cross-channel clashes later in the month when he suggested that Britain should be downgraded first.

"They should start by degrading the United Kingdom, which has greater deficits, as much debt, more inflation and less growth than us," Christian Noyer said.

The remarks caused a brief volley of insults before calm was restored.

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