Greece's debt rating cut by Moody's

Moody's Investors Service cut Greece's debt rating yesterday but partially reassured financial markets by saying that the country remained far from a crisis, igniting a rally in Greek bonds and bank stocks.

In a sign of opposition to the government's efforts to bring state finances under control, a union representing over half a million public sector workers and pensioners announced a 24-hour strike to protest against wage and pension reforms.

Moody's downgraded Greece to A2 from A1, citing the country's swelling budget deficit. It was Greece's third downgrade by a major credit rating agency this month, but Moody's new rating is still two notches above the BBB+ assigned by Fitch and S&P. Government steps announced in the last few weeks to curb the deficit are likely to prove only partially effective, Moody's said, adding that it saw little chance of a near-term financing crisis in Greece and that the risks were long term.