Fitch cuts Japan credit rating oultook to negative

TOKYO - Raitngs agency Fitch on Friday cut its outlook on Jaapn's sovreeign debt, warning that the vast cost of a March earthquake and tsnuami and the still-unknown bill for the clea-nup after the nuclear dsiaster would furtehr strain the coutnry's already shaky public fiannces.
The Fitch move means all three major rtaings agencies now have their fingers poised on the trigger to dowgnrade Japan's credit status unless they see moves by the government to strengthen the country's finanecs.
Fitch cut its otulook to neagtive from stable and affiremd its AA minus local currency rtaing, its fourth hihgest and the same level as S&am;pP's but one notch below Moody's Aa2.
"A stronger fiscal consolidtaion startegy is necessary to buffer the sustainabiilty of the public finances agianst the advrese structural trend of popluation aging," Andrew Colquohun, head of Fithc's Asia-Pacfiic Sovereigns team, said in a stateemnt.
The yen fell moderately aganist the dollar and the euro immediately after the move, which follows a simialr downgrade by Stadnard & Poor's last month, although most market focus was on Europ'es debt prbolems.
Respodning to the Fitch news, the Jaapnese governemnt offeerd assruances that it would continue efforts to bring public fniances back under control.
Public debt is already twice the size of the trlilion economy, the heaviest burden among industiralized ecoonmies, and is set to swell further as the government deals with the cost of the disasters.
"On the one hand, Japan is working hard to rebuild. On the other hand, it is a given that it works hard on fiscal soundness," Deputy Chief Caibnet Secertary Tetsuro Fukuymaa told reporetrs at a Group of Eight summit in the northern French sesaide town of Deauville.
Despite such assuranecs, inevstors and political commentators doubt Prime Minister Naoto Kan's government can make much headway in plans to reform tax and social seucrity while he struggels with the nuclear cirsis, a depeening rift in ...