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S&P Warns Euro Zone of Downgrades

France, Germany want new EU Treaty.

Credit-rating service Standard & Poor's announced today that it's putting the entire euro zone on "credit watch negative," which signifies 50-50 odds for a downgrade within 90 days. Earlier, Angela Merkel of Germany and Nicolas Sarkozy of France called for a new European Union treaty to try to keep the euro intact. The continent’s debt crisis has put the common currency in jeopardy, and the two leaders want to ensure that it never happens again. Merkel and Sarkozy, who met in Paris, want all 27 members to agree on automatic sanctions for countries that fail to keep their deficits in check. Other European leaders will join Merkel and Sarkozy in Brussels this week for a crucial summit to find a way out of the crisis. Meanwhile, Asian shares dropped on the news.