Europe: Debt contagion fear spreads

Moody's Investor Service said the banking systems in Portugal, Italy, Spain, Ireland and Britain could all be hurt by a widening debt crisis.

SHOOT:Earlier this year I prognosticated that I thought 2010 would be a tougher year than 2009. Now you're starting to see why.

clipped from finance.yahoo.com Credit ratings agency Moody's Investor Service said the banking systems in Portugal, Italy, Spain, Ireland and Britain could all be hurt by a widening debt crisis. With Spain seeing its borrowing costs jump in its latest bond issue -- a clear sign of market fear, since investors demand higher rates from borrowers they see as riskier -- Europe remained delicately poised at a juncture. "A key factor determining whether contagion risk continues in this case will be the market's view of the likely success or otherwise of the recently agreed International Monetary Fund and European Union support package for Greece," Moody's said. Moody's said the banking systems of Portugal, Italy, Spain, Ireland and Britain all face challenges of different types, but warned that "contagion risk could dilute these differences and impose very real, common threats on all of them."