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Fitch says spending cuts would not prompt ratings action

A flag is reflected on the window of the Fitch Ratings headquarters in New York February 6, 2013. REUTERS/Brendan McDermid
A flag is reflected on the window of the Fitch Ratings headquarters in New York February 6, 2013. REUTERS/Brendan McDermid

NEW YORK (Reuters) - Fitch Ratings on Wednesday said implementation of automatic U.S. government spending cuts due March 1, along with a government shutdown, would not prompt a negative rating action.

Implementation of the spending cuts, known as the "sequester," and a government shutdown, would however "further erode confidence that timely agreement will be reached on additional deficit reduction measures necessary to secure the 'AAA' rating," Fitch said in a statement.

Fitch said the suspension of the debt limit to May 19 has reduced pressure on the U.S. 'AAA' rating, and said it does not expect a repeat of the U.S. debt ceiling crisis of August 2011.

Failure to raise the debt ceiling in a timely fashion however would prompt a review and likely downgrade of the U.S. sovereign rating, Fitch said.

(Reporting By Chris Reese; Editing by Theodore d'Afflisio)

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