Euro breakup threat 'greatly exaggerated:' Fitch (by William L. Watts)

FRANKFURT (MarketWatch) -- Greece, as already reflected by its CCC credit rating, is likely to default, but probably won't leave the euro, Fitch Ratings said in a report released Tuesday. "Concerns over the risk of a break-up of the euro zone are greatly exaggerated," said David Riley, Fitch's head of global sovereign ratings. Meanwhile, support for a "United States of Europe" involving full fiscal and political union doesn't exist, the agency said. Instead, a "third way" that implies much stronger pan-European supervisory and regulatory oversight for financial institutions and tighter coordination of domestic economic and fiscal policies is likely to take shape slowly, Fitch said, along with a mechanism to facilitate "orderly" sovereign debt restructurings. "Fitch's ratings continue to be underpinned by the fact that it is a case of 'no going back' for the euro zone and its member states and it remains confident that the [European Central Bank] will continue to intervene to ensure that a market-induced liquidity crisis does not become an unnecessary and 'accidental' sovereign default event," Riley said.