EU speeds up anti-crisis measures after US downgrade

The French and German leaders in a statement urged eurozone legislatures to hold extraordinary sessions to ratify a July deal on expanding the powers of the bloc's €440 billion bailout fund, the EFSF. "In particular, they stress the importance that parliamentary approval will be obtained swiftly by the end of September in their two countries," they said.

Spain, Italy and Belgium followed suit by announcing that MPs would meet early to vote on the package.

Ratification of the EFSF upgrade is deemed as essential for the ECB to buy Italian and Spanish debt.

The bank last week agreed to return to bond markets to buy debt from troubled euro-countries but limited new purchases to Ireland and Portugal in a move that did little to calm markets.

Italy and Spain, whose borrowing costs recently spiked to near-bailout levels have also announced fresh debt-reduction measures.

Italian Prime Minister Silvio Berlusconi on Friday said he will speed up austerity measures in order to achieve a budget balance by 2013 instead of 2014 as originally planned. Madrid announced new reforms to bring in an additional €4.9 billion.

Welcoming the developments, the ECB said it will "actively implement" its bond-purchasing program in an indication that it will start buying Italian and Spanish debt from as early as Monday on.

Markets remain sceptical despite the new interventions however, with shares continuing to fall in Asian markets on Monday morning. South Korea at one point slumped by more than 7 percent. The US downgrade saw Middle Eastern markets tumble earlier on Sunday - their first day of trading. Israel fell by seven percent, while markets in Dubai and Egypt dropped some four percent.

In a mark of the gravity of Standard & Poor's move, US treasury secretary Timothy Geithner faced opposition calls to step down.

Fearing that its own triple-A status might come under fire, France on Friday was the first country to reaffirm its "confidence" in the US economy. Jitters on France are linked to the global economic situation but also to concerns that it might be forced to increase its contribution to the EFSF if the EU fund is made bigger in future.

Standard & Poor's on Sunday said its outlook on France is "stable" and that there is no downgrade on the cards.

Only five other eurozone countries apart from France have AAA status: Austria, Finland, Germany, Luxembourg and the Netherlands. At the other end of the spectrum, Greece is said to be in 'partial default,' while Portugal and Ireland have been given junk status by Moody's, another one of the world's 'big three' ratings agencies.

Meanwhile, China, the world's leading creditor, appears to be losing patience with profligate Western countres.

Beijing has purchased more than $1.1 trillion of US debt and the downgrade has fuelled fears it may not get all its money back.

On Saturday, a commentary released by China's official Xinhua news agency said that Washington should "cure its addiction to debts" and "live within its means."

"The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone."