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EU to Probe Credit Rating Agencies for Failing to Warn of Problems

The European Union is expected to review credit rating companies after allegations that they were too slow to warn of problems with the U.S. home loan businesses.

French President Nicholas Sarkozy has urged the group of seven industrialized nations to better monitor international financial markets in the face of global credit concerns. His appeal in a letter to German Chancellor Angela Merkel was made public Thursday as the French stock market dropped to its lowest level this year.

Critics have accused credit rating firms, including Moody's Investors Service and Standard and Poor's, of underestimating the risk in the sub-prime mortgage market.

Defaults on sub-prime loans, or those made to people with poor credit, have risen sharply in the United States in recent months. The problem has begun to affect banks and financial companies elsewhere in the world.

Some information for this report was provided by AFP, AP and Reuters.