U. S. Stocks Sink to the biggest drop since 2008

The United States has lost its top-level AAA credit rating from Standard and Poor on Friday, hours after investors worried the euro zone debt crisis has forced Italy to speed up the economy drive.

In a sign of how concerned the world's leaders on a slide in stocks, which wiped out about $ 2.5 trillion from global markets this week, Italian Prime Minister Silvio Berlusconi said the finance ministers of the Group of Seven industrialized countries meet in "several days" to look for a common action plan.

Concern the euro zone debt crisis spread and the U.S. went into recession brought the defeat of the financial markets. Better-than-expected job growth in July helped to support Wall Street on Friday, but stocks slipped back into the red at the end of the auction.

S & P cut in U.S. long-term credit rating one notch to AA-plus was an unprecedented blow, and as a result of concerns about budget deficits and debt burdens rise. Move is likely to eventually increase the cost of borrowing for the U.S. government, companies and consumers.

As well as cutting rating, S & P said the outlook was "negative", another sign that fall is possible in the next 12 to 18 months.

S & P said the political deadlock in Washington was one of the reasons for the decline, saying it was policy to prevent the United States from the decision of its deficit and debt problems.

"The downgrade reflects our view that fiscal consolidation plan that Congress and the administration recently agreed to lag behind what, in our opinion, it would be necessary to stabilize the government medium-term debt dynamics," S & P said in a statement.

While the impact of rating to reduce the financial markets when they reopen on Monday may be modest, because the decision was to be expected, the shift could have serious long-term implications for U.S. standing in the world, the status of the dollar and the global financial system.

"The Global Positioning System now have to adapt to many uncertainties and the consequences once unimaginable losses AAA of America," Mohamed El-Erian, co-head of investment at Pacific Investment Management Company, which oversees $ 1.2 trillion in assets, told Reuters.

In Europe, Italy buckles to global pressure and promised to propose cuts to balance the budget in 2013 in exchange for the European Central Bank to help with financing.

After a frantic round of telephone diplomacy, Mr Berlusconi said his government would propose cuts to balance the budget in Italian in 2013, a year ahead of schedule, and rush through the welfare and labor market reforms.

"We consider it expedient to introduce the acceleration measures we have introduced in recent years in financial planning law to enable us to achieve our goal of balancing the budget early in 2013 instead of 2014," Berlusconi told a news conference after a day of phone calls to world leaders, including German Chancellor Angela Merkel and Finance Minister Tim Geithner.

Sources close to the matter told Reuters ECB require such measures in exchange for the purchase of bonds to relieve the pressure on Italy, which has been the subject of the market attack.

Berlusconi said that the G7 finance ministers' meeting could also pave the way for a meeting of Heads of State.

Later the same day in the White House said U.S. President Barack Obama spoke separately with Merkel and French President Nicolas Sarkozy's euro-zone crisis, but offered no details.

The ECB had no immediate reaction to the statement of Italy, but the representative of the European Commission said measures responded to an assessment set out earlier in the day, the EU Economic and Monetary Affairs Commissioner Olli Rehn and "going in the right direction."

Investors have been responded to 48 billion euro savings package adopted by the government Berlusconi, in part because most of the measures delayed until after elections scheduled for 2013, on a clear political reasons.

The crisis has given attention at the highest level, as the leaders of Germany, France and Spain is set on the phone during the day.

Discord among EU policy makers on how to stop the spread of a catastrophic debt crisis in Italy and Spain, the eurozone third and fourth largest economies, has disappointed investors.

The European Central Bank disappointed markets by buying Irish and Portuguese bonds, but no government securities in Italy and Spain, where bond yields exploded this week on fears that they may need to be saved.

Now, it seems, was a gambit to force Italy to act.

"In principle it is correct to say that the ECB may start buying Spanish and Italian bonds, if they made extra efforts with fiscal and structural reforms," a senior official of the euro area told Reuters.

Bank of Spain governor, Jose Manuel Gonazalez-Paramo, a member of the ECB governing council, said he expects to announce additional measures in Spain August 19 to ensure that it meets the objectives of budget austerity.

Earlier in the day, China and Japan have called for coordinated action to prevent a global recession sources in Europe and the United States, as well as Ren.

"International policy coordination in the G7 and G20 is crucial," he said at a press conference, breaking his vacation and returned to Brussels.

Britain called for "concerted international effort" to show the governments will work together to prevent a financial crisis and Brazil also called for unity, saying the world economy "in a situation of stress."