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Europe debt plan 'positive step,' Fitch says (XEU) *PIC*

Europe debt plan 'positive step,' Fitch says (by William L. Watts)

FRANKFURT (MarketWatch) -- Fitch Ratings on Friday said the three-pronged plan announced by European leaders to contain the euro-zone debt crisis is a "positive step," but that the effectiveness of the measures will depend "on greater clarity on the details" of the package and its "full and timely implementation." The agreement to boost the lending capacity of the European Financial Stability Facility to 1 trillion euros ($1.4 trillion) "is a critical first step to enhance market confidence in the ability of policy makers to limit the risk of contagion spreading to core euro area countries." The company said more detail is needed to assess the viability of the two options being considered -- providing guarantees on sovereign bond issuance and setting up a special purpose vehicle. Until the viability of those options can be assessed, Fitch said it "views as critical the role of the [European Central Bank] in continuing to intervene" in the secondary market for euro-zone government bonds "and ultimately to be ready to act as a lender of last resort" to illiquid sovereigns.