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A trader working on the floor of the New York Stock Exchange just after the opening bell on August 5, 2011.G7 finance ministers may meet "in a few days," Berlusconi saysMarkets are demanding action, not more words, investment manager saysObama talks with German, French leadersEuropean stock indices all finish down; the Dow fluctuates wildly(CNN) -- The Standard & Poor's rating agency served the Obama administration with notice Friday afternoon that it planned to downgrade the U.S. government's AAA credit rating but was reconsidering after the administration challenged its analysis, an administration official said.
The source, a senior official involved in the discussions, said the agency was off by "trillions" in its economic model and was revising its analysis.
S&P, which had not made public its ruling, did not return repeated calls for comment.
The official described the talks as a "moving target" and said "it's clear some people there still want to go forward" and downgrade U.S. debt.
Rumors had swirled for most of Friday that S&P was preparing to make such a move. But even several hours after the market close, official notice had not materialized.
Rating agencies -- S&P, Moody's and Fitch -- analyze risk and give debt a "grade" that is supposed to reflect the borrower's ability to repay its loans.
The safest bets are stamped AAA. That's where U.S. debt has stood for years. Moody's first assigned the United States a AAA rating in 1917.
The news broke shortly after Italian Prime Minister Silvio Berlusconi announced in Rome that finance ministers of the Group of Seven industrialized nations may meet "in a few days" to discuss the sagging world economy.
At a hastily arranged news conference, Berlusconi -- who did not name a date for the meeting -- said he and French President Nicolas Sarkozy had discussed the matter earlier in the day.
"The answers to the crisis must be coordinated at an international level," Economy Minister Giulio Tremonti said. He added that he had spoken with U.S. Treasury Secretary Timothy Geithner and was planning to speak later in the day with President Barack Obama.
Tremonti predicted that his country's budget will be balanced in 2013, a year earlier than previously planned, and a constitutional amendment will ensure that it remains balanced.
The G7 members are Britain, Canada, France, Germany, Italy, Japan and the United States.
The announcement came on a day when financial anxiety gripped the globe. Stock markets worldwide saw intense volatility amid worries of a widening debt crisis in Europe and a stalled economic recovery in the United States.
Stock market values fell across Asia and Europe on Friday. U.S. markets were dramatically up and down a day after having their worst day since the 2008 financial crisis.
Concerns about debt issues in Europe appeared to battle with optimism that a positive U.S. jobs report indicated that the American economy is not headed for a new recession, the dreaded "double-dip."
"The crisis in Europe is quickly becoming on par with the financial crisis of 2008," David Levy, portfolio manager at Kenjol Capital Management, told CNN Money. "The jobs report shows that things aren't getting much worse in the U.S., but the focus is clearly on Europe at this point."
Investors will be looking for a strong reaction over the weekend and into next week, said Mohamed El-Erian, CEO of the global investment firm Pimco.
"Words aren't enough," he said. "The markets now are saying, 'We've heard it all before. We want to see action.' "
The Dow Jones index spiked 170 points in early trading on a better-than-expected jobs report, but then dropped to be off by 200 points in mid-morning trading. It closed Friday up 60.93 points (0.54%). The Nasdaq closed down 23.98 points (0.94%).
In London, the FTSE 100 closed off 146 points, or 2.7%, to close the week down nearly 10%. Germany's DAX fell 2.78% to finish the week down nearly 13%. And the French CAC 40 declined 1.26% to finish the week off 10.73%.
"We are going to get through this," Obama said at the Washington Navy Yard, where he announced a jobs program for veterans. "Things will get better. And we're going to get there together."
Obama, who spoke Friday afternoon with France's Sarkozy and German Chancellor Angela Merkel about the crisis, noted that July marked the 17th consecutive month of private-sector job growth in the U.S. but said much more work needs to be done.
Friday's stock slide started in Asia, where leaders tried to contain the damage. The South Korean Finance Ministry held an emergency meeting. Japanese authorities sought to reassure nervous investors, while China's foreign minister expressed confidence that other world economies would weather the storm.
In Europe, leaders sought to dampen investors' fears that debt crises hobbling Greece, Ireland and Portugal could take a toll on larger economies such as Italy and Spain.
Merkel and Sarkozy planned to interrupt their vacations to speak by phone about the economic unease, a German government spokesman said. Sarkozy was to speak separately with Spanish leader Jose Luis Rodriguez Zapatero, the French newspaper Le Monde reported.
In Belgium, EU Economic and Monetary Affairs Commissioner Olli Rehn tried to calm the swirl of rumors surrounding stability in the eurozone, the 17-country region that uses the euro as a common currency. He said he does not believe Italy and Spain will need bailing out.
Concern about the debt held by the governments of Italy and Spain -- which has pushed up their costs of borrowing -- was "incomprehensible," he said.
"The market unrest witnessed in the last few days is simply not justified on the grounds of economic fundamentals," Rehn said, having broken off his holidays to return to Brussels. "It is not justified for Italy. It is not justified for Spain."
He insisted that needed reforms will be undertaken, following the eurozone nations' agreement of July 21, adding that it would take weeks, rather than months, for the member states to ratify them.
Seeking to reassure the markets, he said, "The political will to defend the euro should not be underestimated."
He said measures should be in place next month to improve the new European Financial Stability Facility, a euro rescue fund with 440 billion euros ($625 billion).
Rehn's remarks followed a statement made Thursday by European Commission President Jose Manuel Barroso that was widely seen as fueling concerns over Europe's ability to limit the debt crisis to smaller members like Greece, Ireland and Portugal.
"We are no longer managing a crisis just in the euro area periphery," Barroso said, as he urged European leaders to act quickly to carry out reforms. "Euro area financial stability must be safeguarded."
Heightening concerns in Europe, a monthly economic bulletin released Friday from Banco de Espana -- the Bank of Spain -- showed that the Spanish economy slowed through the second quarter on its road to a "moderate recovery." Gross domestic product grew 0.2% quarter-over-quarter, or 0.7% year-over-year.
Asian stock markets, which closed before the U.S. jobs announcement, were down across the board Friday.
Japan's benchmark Nikkei index closed down 3.72%. The Hang Seng index in Hong Kong fell more than 4%, and the Shanghai Composite was off less than 2%.
Asian leaders sought to reassure jittery markets that they are on the case.
China's foreign minister, Yang Jiechi, expressed confidence in European economies, saying the country welcomed initiatives taken by European Union leaders following their July summit on the debt crisis.
In South Korea, the finance ministry called an emergency meeting to discuss concerns about a growing global economic crisis.
"We believe that the recent market instability stemmed from concerns over a double-dip recession in the U.S. and spreading anxiety over the fiscal crisis in Europe," the semi-official Yonhap News Agency quoted the ministry as saying in a statement.
"The government will closely monitor financial market situations in cooperation with related agencies and take proactive actions to ease market anxiety."
In Japan, Finance Minister Yoshihiko Noda also said he will continue to monitor markets as his country watches to see if the ministry's efforts on Thursday to bring down the value of the yen will succeed.
Uncertainty over the economic situation in the United States and Europe also dented Latin American confidence.
Mexico's stock market, the BMV, fell 3.37% Thursday, its biggest drop since February 2009 and the fourth consecutive day of declines, but rose 1.13% on Friday, the state-run Notimex news agency reported.
In the United States, the Dow tumbled 512 points Thursday, its ninth-deepest point drop ever.
U.S. markets already had been sharply lower on widespread worries, including the weak job market.
But the selling gained momentum as Japanese and European policymakers stepped in with dramatic measures to shore up their financial markets. All three major indexes tumbled more than 4% Thursday and erased all their gains for the year.CNN's Ben Brumfield, Laura Smith-Spark, Mariano Castillo, Mike Pearson and Kendra Petersen contributed to this report.View the original article here
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