Moody's says eurozone talks failed

Crisis clouds darkened again over the debt-ridden eurozone economies on Monday after last weeks EU summit deal afforded only a brief respite from tensions on financial markets.Ratings agency Moodys was first to turn the screw, declaring the talks had failed to produce decisive policy measures and threatening to review the credit ratings of all EU states within the next three months.Meanwhile, Italy edged through a bond test, but still had to pay an exceptionally high rate to borrow for only 12 months.Traders were watching nervously as Italys commitment to austerity measures was tested by a nationwide strike, and EU and IMF inspectors headed to Greece to negotiate the next stage in its bail-out.Asian markets had nudged upwards on hopes that the deal would draw a line under the crisis, but Europe opened down as concerns returned.Londons FTSE 100 index began trading down 0.38 percent to 5,508.20 points, Frankfurts DAX 30 was down 0.69 percent to 5,945.19 and in Paris the CAC 40 slid 0.67 percent to 3,150.84.European leaders had hoped that Fridays agreement to move towards a fiscal pact, seeking to eradicate their public deficits under close EU supervision, would reassure markets of the safety of their debts.But Moodys, the first credit agency to pronounce on the deal, complained of an absence of decisive policy measures and warned it would join Standard & Poors in reviewing sovereign debt ratings.The absence of measures to stabilise credit markets over the short term means that the euro area, and the wider EU, remain prone to further shocks and the cohesion of the euro area under continued threat, Moodys said.Many market analysts were also scathing about the measures, but said traders might not be in a hurry to write off the plan immediately.It is possible that investors will hold their fire to see what the ratings agencies make of the new plan, currency experts Moneycorp said in its daily note to investors.If the agencies downgrade euroland sovereign risk... that would mean more pain for government bonds and, in turn, more losses for the banks that would have to mark down the value of their bond holdings, it said.The first big test of market confidence came immediately, as Italy issued seven billion euros ($9.3 billion) in 12-month bonds to fund its debt while Prime Minister Mario Monti pursues a harsh austerity programme.Rome hit its target but will have to pay 5.952 percent interest, lower than the rate for the last similar sale, but still dangerously high.If buyers had insisted on higher interest rates on the debt it could threaten the governments deficit reduction plan and act as a signal that even Europes biggest economies will struggle to escape the crisis.The bond issue came amid nationwide strike action against the cuts, and after Montis newly installed technocratic government warned of an extreme financial and economic emergency.The main Italian unions called three-hour work stoppages in their first coordinated strike action in six years -- with more protests against proposed property tax increases and pension reforms planned in the coming days.Meanwhile, Greece was to hold tense talks with its international creditors and debt holders on the application of a new eurozone bailout designed to alleviate the countrys huge loan repayments.Greek Finance Minister Evangelos Venizelos was to meet with senior auditors from the European Commission, the European Central Bank and the International Monetary Fund from 0900 GMT, his office said.There will be negotiations on the new programme, a finance ministry source said, referring to the eurozone lifeline thrown to Athens in late October which includes a 50-percent write-down on the countrys debt.Venizelos was then scheduled to meet with Institute of International Finance chief Charles Dallara, who represents the banks that will be forced to take a haircut or write-down on their Greek debt holdings.The minister has warned of a hard battle ahead under very difficult conditions in Europe and the world.Athens was forced to seek EU-IMF bailouts last year after markets turned on it because it had provided inaccurate deficit data and built up an unsustainable debt mountain of more than 350 billion euros ($470 billion).