A warning from a major credit rating agency Tuesday sent European stocks and the euro tumbling, serving as a stark reminder to investors that the financial situation in Central and Eastern Europe was deteriorating and that the region faced a protracted slump.
Moody’s Investors Service, in a report highlighting the dangers of West European ownership of East European banks, warned of “hard landings” for most countries in the region and negative rating pressure on banks operating there. Those with the highest vulnerability are the Baltic countries, Hungary, Croatia, Romania and Bulgaria, Moody’s said.
European shares fell to their lowest close in three weeks, with declines led by the already battered shares of financial institutions from Vienna to Wall Street.
The euro fell to $1.2589 in late trading in London, from $1.2801 late Monday.