Asian stocks fall on first trading day after U.S. credit downgrade

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Key Asian stock markets extend their losses on Monday in what is expected to make a full day of events on the world market after the Standard and Poor's downgraded the credit of the United States last week.

In afternoon trade, Tokyo's Nikkei index fell 240 points or 2.5%.

South Korea's KOSPI index slipped by 6.2%. In Australia, the All Ordinaries index lost 2.2%. Shanghai Composite was down by 3.7%.

Hong Kong's Hang Seng index fell by 4%.

Similarly, U.S. stock futures fell by 2.5% on a broad front in the electronic trading on Monday morning. The Dow Industrials are willing to open up some 268 points lower.

The first U.S. futures gauge investor sentiment after the downgrade on Friday evening, remove the AAA status for the first time the United States. They give an indication of how investors will react if the U.S. begins regular hours trading at 21.30 clock ET Monday.

In addition to downgrade the United States, worried investors about the debt crisis in several European countries, although the action from the G7 and the European Central Bank's Sunday helps to eliminate some of these fears.

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Say representatives of the leading industrial nations finance that they are obliged to take "all necessary measures to support financial stability and growth in a spirit of cooperation and trust."

They welcomed the "decisive action in the U.S. and Europe will be met" and "additional policy measures announced by Italy and Spain to strengthen budgetary discipline and support the recovery of economic activity and job creation."

"We need to take a coordinated approach is required to ensure liquidity and support the functioning of financial markets, financial stability and economic growth", the G7 finance ministers and central bank governors said in a statement on Sunday evening.

G7 countries are Britain, France, Germany, Italy, Japan, Canada and the United States.

Similarly, the European Central Bank, an effort to calm markets Sunday. Said it would implement the bond purchase program and welcomes the announcement by Italy and Spain provided on new measures to reduce their deficits. It tells the government stated that "firm and rapid implementation of the" reform "important."

This move is an escalation in the official response to the debt crisis in Europe, now more than a year, and until recently included on smaller economies such as Greece, Ireland and Portugal.
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The International Monetary Fund director Christine Lagarde cheered the announcement.

"I welcome the statement from the European Central Bank, the leaders of Germany and France and from the G7 and renewed their commitment to take all necessary measures in a coordinated manner done to ensure the stability and liquidity in the financial markets. This cooperation will contribute to maintaining confidence and spur the growth of world economy, "he said in a statement.

Market in the Middle East, the first open since the downgrade, which fell sharply on Sunday. Israel temporarily halted trading markets at one point and joined by more than 6%, while the Dubai Financial Market General Index fell by 3.7%.

General Index at the Abu Dhabi Securities Exchange fell more than 2.5%, while in Saudi Arabia, the Tadawul All-Share index by almost 5.5% in trading on Saturday.

U.S. officials were talking with the various "investors" of the downgrading by rating agencies try to "reduce" short-term negative effect of the announcement Friday, said an official from the Ministry of Finance CNN.

Standard & Poor 's top official said on Sunday that the credit rating in the United States both calls for political consensus on a significant reduction in the deficit and warning of potential problems down the road further reduced credit.

"We have a negative outlook on the rating and that means we think the risk is currently showing in the rankings down," said David Beers, global head of S & P sovereign credit ratings on "Fox News Sunday."

However, Beers said the market reacted to the debt crisis in several European countries and the fear of a global economic downturn than in the U.S. have a credit downgrade.

John Chambers, head of the S & P sovereign ratings, told ABC "This Week" program, which could take years to return to the United States to AAA status.

"Well, if history is a guide, it might take a while," said Chambers. "We had five governments that lose their AAA to get it back the time for about five of the nine to 18 years is required. This will take a few moments."

Concern institution, "which centers on the political side and on the fiscal side," said Chambers.

"So it will take to stabilize the debt as part of economic decline and eventually," he said. "And it will, I think of a better way to build consensus in Washington, what do we see now."

Both beers and Bill Miller, chairman and chief investment officer at Legg Mason Capital Management, said the Fox programs, they do not expect the downgrade to a peak in U.S. interest rates, a possible result of a higher risk now the U.S. cause-related debt.

"I do not think that we pay more in interest," Miller, on the downgrade more than a symbolic event of an economic event.

A top market observers agree with HSBC, said fears of rising interest rates "quite sensational."

"AA + credit is still good. The difference between the AAA and AA + is very low and implies a very, very small," said Ben Pedley, senior director and chief investment strategist at HSBC.

"Expect great things happen in the U.S. not just happen," said Pedley that that is the time of the downgrade is very surprising given the recognized position in the market last week.

Rating agencies like S & P, Moody's and Fitch to analyze risks and provide a class of debt, which should reflect the ability of borrowers to repay loans. The safest course is marked AAA. That's where the U.S. debt has been established for many years.

Moody's awarded for the first time the United States AAA rating in 1917. Fitch and Moody's, the other two major rating agencies, maintain the AAA rating for the United States after the deal's debt last week, although Moody's lowers outlook for U.S. debt to "negative".

A negative outlook indicates the possibility that Moody's could lower the country's sovereign ratings in a year or two.

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