Fitch keeps Italy outlook negative in volatile political landscape

MILAN Mon Feb 17, 2014 10:59am EST

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MILAN Feb 17 (Reuters) - Fitch kept Italy on Monday on a 'negative' credit rating outlook as it said a new government led by centre-left leader Matteo Renzi was likely to face similar challenges to ousted predecessor Enrico Letta in a volatile political landscape.

Political uncertainty and a deepening of Italy's recession had prompted Fitch to downgrade the country's sovereign rating to its current BBB+ in March.

"Uncertainty about the durability of (Italian) governments and their capacity for structural reform and fiscal consolidation is one reason for the Negative Outlook on Italy's BBB+ rating," Fitch said.

Fitch's cautious assessment comes days after rival agency Moody's lifted Italy's outlook to 'stable' from 'negative' for the first time since the start of the euro zone crisis, mirroring an improvement of its outlook on Spain.

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