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Stocks trimmed an early rally after Fitch Ratings lowered France's rating outlook to negative and put the grades of Belgium, Spain, Slovenia, Italy, Ireland and Cyprus on review for a downgrade, citing Europe's failure to find a "comprehensive solution" to the debt crisis.
And Fitch Ratings has revised the U.S.'s credit rating outlook to negative, warning of a downgrade if a "credible" budget deal is not reached by 2013.
China's foreign-currency debt rating outlook was raised to positive by Fitch Ratings, which forecast that the nation's reserves of overseas currencies would exceed $400 billion this year, second only to Japan.
Two ratings agencies have now downgraded Russia's credit rating outlook to negative from stable.
Last year the UK was given a warning by Fitch when the credit rating outlook was changed to negative, becoming the second ratings agency to put the treasured AAA rating at risk after Moody's made the same move.
Its rating outlook remained negative.
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The debt rating outlooks of Thailand and South Korea were raised to positive from stable by Moody's Investors Service.
Of the 14 rated companies in the sector, 67% have negative rating outlooks, versus 17% in 2003.
Nevertheless, the rating outlooks are negative because further reimbursement cuts are possible, as CMS and the LTACH community itself do not view the adequacy of reimbursement levels similarly.
"The data we've received have shown more buoyancy and resiliency and that's causing a reconsideration of the interest rate outlook," said William Sullivan, economist at Morgan Stanley Dean Witter & Company.
We warn that the credit rating downgrades and a lower rate outlook are important red flags that investors should consider before blindly jumping on the back of a bull.
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