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New doubts surface in Europe

Tuesday, July 24, 2012 - 01:47

July 24 - The euro fell to a more than two-year low against the dollar as weak euro zone data and a dimmer outlook for the region's strongest economies from Moody's further clouded the prospects for the common currency. Matt Cowan reports.

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As Europe's most potent economies faced the prospect of a downgrade, new doubts are being voiced about Greece's ability to keep its commitments. Inspectors from the European Commission, European Central Bank and International Monetary Fund -- together known as the troika -- have returned to Athens to monitor the progress of the twice bailed out country. Three EU offiicals are on the record as saying Greece would be found to be way off track and that further debt restructuring would likely be necessary. Concerns that Spain would be forced to seek a fullscale bailout meant it had to pay a near euro-era high for short term debt. Madrid Business School Professor Rafel Pampillon says the consequences for his country could be extreme without more help. SOUNDBITE: ECONOMY PROFESSOR AT MADRID'S BUSINESS SCHOOL, RAFAEL PAMPILLON, SAYING (Spanish) : "If the European Central Bank does not take action and if there is no rescue for Spain, our last option would be the break down. The break down of the euro which would bring unpredictable consequences, disastrous for the Spanish and European economies as well as the global economy." Late on Monday, the credit ratings agency Moody's revised its outlook for Germany, Luxembourg and the Netherlands to negative, warning about the potential bill of having to prop up indebted states. As data emerged showing manufacturing slowing more than expected in Germany and France, the euro slid to a more than two-year low. SOUNDBITE: Fidel Helmer From Hauck & Aufhaeuser, saying (German) : "I think that Greece will leave the euro zone sooner or later. As of today the troika is working there again, it is expected to deliver a neutral report. And as the reports were not really good in the past, it is hard to believe that it would be different now. And that will result in the halt of financial aid and Greece will have no choice but to leave the euro zone." Italy's benchmark stock index fell to its lowest level since the launch of the euro. Matt Cowan, Reuters

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New doubts surface in Europe

Tuesday, July 24, 2012 - 01:47