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Downgraded France Says It Needs More Time

Moscovici also insisted that relations with Germany remained strong. There have been reports recently that Germany is concerned about the health of the French economy.

But German Finance Minister Wolfgang Schaeuble seemed unconcerned about the downgrade.

"We have received the news that, overnight, our most important partner got a little admonition from a rating agency," Schaeuble said in the German Parliament. "The rating for France is still very stable, so that we avoid any dramatization."

Moody's itself said that the rating remains so high â¿¿ now Aa1, just a notch below triple-A â¿¿because of the size of the French economy and the government's commitment to make structural reforms. It kept the rating's outlook at negative, meaning it could face future downgrades.

Moscovici said he expected the country to continue to be able to borrow at those historically low rates because of the seriousness of its reform package. Analysts warned, however, that French banks could next face downgrades, since they are significant holders of French government debt and ultimately backed by the government.

___

Geir Moulson in Berlin and Carlo Piovano in Brussels contributed to this report.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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