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Juncker slams Moody's Greek downgrade

Oslo - Jean-Claude Juncker, head of the Eurogroup of finance ministers, criticised rating agency Moody's on Tuesday for its "irrational" downgrade of Greece's debt to "junk" status.

"I don't understand why this further downgrading did intervene," Juncker, who is also prime minister of Luxembourg, told reporters following a seminar on the European Union in Oslo.

Late on Monday, the US-based rating agency slashed its debt rating for Greece by four notches from A3 to Ba1, saying that even with the help of an EU-IMF bailout package there was considerable uncertainty about Greece would reduce its huge debt and balance its finances.

The downgrade means some investors will no longer be allowed to buy Greek debt under the terms of their investment mandate and could lead to still higher borrowing costs for Athens if it goes to the markets for cash.

"I am totally convinced that ... a few months from now, the financial markets will see that they were wrong. They're misinterpreting the decisions which have been taken," Juncker insisted.

He underlined Greece had submitted to "strict" measures to put its public finances in order to receive the EU-IMF bailout package.

Downgrade 'surprising and highly unfortunate'

"These downgradings of rating are not in each and every case understandable and rational," he said, adding "personally, I think that financial markets are behaving sometimes in a very irrational way."

Juncker added that the EU's fundamentals were "far better than those of the US and Japan," but that the eurozone was the the target of financial markets because of its inability to "at least narrow imbalances" between EU countries.

Olli Rehn, the EU's top economic commissioner, told the European parliament earlier on Tuesday that the action by Moody's was "surprising and highly unfortunate" and said it raised questions about the role of ratings agencies in the financial system.

Standard & Poor's in April also downgraded Greece's sovereign debt to junk status, while Fitch, the other major international ratings agency, warned in late May that it might also cut the country to the same level.

  - AFP

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