Crisis threatens EU sovereign ratings: Moody's (Reuters)

(Reuters) ? Moody's Investors Service warned on Monday the rapid escalation of the euro zone sovereign and banking crisis threatens the credit standing of all European government bond ratings.

"While Moody's central scenario remains that the euro area will be preserved without further widespread defaults, even this 'positive' scenario carries very negative rating implications in the interim period," the agency said in a report.

Moody's also noted the political impetus to implement an effective resolution plan may only emerge after a series of shocks, which may lead to more countries losing access to market funding and requiring a support program.

"This would very likely cause those countries' ratings to be moved into speculative grade in view of the solvency tests that would likely be required and the burden-sharing that might be imposed if (as is likely) support were to be needed for a sustained period."

Economist Tim Condon, head of research for Asia at ING, said the Moody's statement was unlikely to surprise markets.

"It's basically common knowledge that everything in Europe is at risk," he said. "Quite a few people are contemplating a euro zone breakup scenario."

Financial markets have put Italy, Spain and now France under increasing pressure on skepticism of the ability of European leaders to resolve the debt crisis, that has already sparked financial bailouts for Greece, Portugal and Ireland.

Italian Prime Minister Mario Monti aims to shore up the country's strained public finances this week by unveiling measures that could include a revamped housing tax.

Contacts between the International Monetary Fund and Rome have intensified as concern has grown about a financial backstop for Italy, should the country need it.

Euro zone finance ministers are due on Tuesday to consider detailed operation rules for the area's bailout fund. Approvals will clear the way for the 440 billion euro ($583.83 billion)fund to attract cash aimed at boosting the fund's resources.

Moody's said the euro area is approaching a junction, leading to either closer integration or greater fragmentation.

The likelihood of even more negative scenarios has arisen in recent weeks, Moody's noted, reflecting political uncertainties in Greece and Italy and a worsening of the region's economic outlook, among other factors.

"The probability of multiple defaults by euro area countries is no longer negligible. In Moody's view, the longer the liquidity crisis continues, the more rapidly the probability of defaults will continue to rise," it said.

Such defaults would increase the chances that one or more members of the bloc would leave the euro area.

"Moody's believes that any multiple-exit scenario -- in other words, a fragmentation of the euro -- would have negative repercussions for the credit standing of all euro area and EU sovereigns."

In the absence of major policy initiatives in the near future that stabilize credit market conditions, or markets stabilizing for any other reason, "the point is likely to be reached where the overall architecture of Moody's ratings within the euro area, and possibly elsewhere, within the EU, will need to be revisited."

($1 = 0.7536 euros)

(Reporting by Ian Chua; Writing by Neil Fullick; Editing by Ian Geoghegan)

Source: http://us.rd.yahoo.com/dailynews/rss/business/*http%3A//news.yahoo.com/s/nm/20111128/bs_nm/us_markets_ratings_europe

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US court won't block its Texas redistricting map (AP)

AUSTIN, Texas ? A federal court refused late Friday to block a congressional redistricting map it drew up for Texas, rejecting a request from the state's attorney general just hours after the Republican accused the court of "undermining the democratic process."

Texas Attorney General Greg Abbott had asked the San Antonio-based court to stay the implementation of its interim map, which the court drafted when minority groups challenged the original plan passed by the Republican-dominated state Legislature.

The court-drawn map would ensure minorities made up the majority in three additional Texas congressional districts. If the 2012 elections were held under the court's map, Democrats would have an advantage as they try to win back the U.S. House.

Abbott said he would appeal to the U.S. Supreme Court. The court-ordered map will remain in place until the legal fights are resolved.

The court drew the maps after minority groups filed a lawsuit, claiming a redistricting plan devised by Republican lawmakers didn't reflect growth in the state's Hispanic and black populations.

In a court filing earlier Friday, Abbott accused the court of overstepping its authority.

"A court's job is to apply the law, not to make policy," he wrote. "A federal court lacks constitutional authority to interfere with the expressed will of the state Legislature unless it is compelled to remedy a specific, identifiable violation of law."

Abbott argued that the Legislature's map "incorporate constituents' concerns about communities of interest and proper representation." He said the court's departure from that map "not only undermines the democratic process, it ignores the voice of the citizenry."

Lawmakers redraw boundaries for the state's legislative districts every 10 years to reflect changes in census data. Texas' population boom in the last decade gave it four new U.S. House seats, which will be filled in the 2012 election.

Like other states with a history of racial discrimination, Texas can't implement those new maps or other changes to voting practices without federal approval under the Voting Rights Act. No federal approval, and looming deadlines for county election officials, made it necessary for the court to issue its own plans ? which could be implemented immediately.

Minorities currently are the majority in 10 of Texas' 32 congressional districts. The new court-drawn map would raise that to 13 out of 36 districts.

Republican lawmakers insist the maps drawn by the Legislature merely reflect the Republican majority in Texas. Experts say that under the legislatively approved map, three of the new seats would likely be won by Republicans.

When drawing the interim map, the court gave priority to ensuring minority voting strength was protected in the 2012 election.

In its own filing Friday, the NAACP cheered the court-drawn interim map as a "step forward for Texas." The group said it, "recognizes the growth of the minority population and takes significant steps toward remedying some of the startling lack of proportionality in the prior plans."

Source: http://us.rd.yahoo.com/dailynews/rss/politics/*http%3A//news.yahoo.com/s/ap/20111126/ap_on_re_us/us_texas_redistricting

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