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Global Markets Down After S&P Cuts US Credit Rating

A money trader waits for calls from clients during the morning trading at a money brokerage in Tokyo Monday, Aug. 8, 2011.

A money trader waits for calls from clients during the morning trading at a money brokerage in Tokyo Monday, Aug. 8, 2011.

Global markets continue to have a negative reaction to Friday's first-ever downgrade of the U.S. credit rating by the Standard & Poors rating agency.

Asian stock markets tumbled in trading Monday.

Tokyo's Nikkei index fell nearly 2.2 percent (202 points) to close at 9,098.

Hong Kong's Hang Seng index also dropped nearly 2.2 percent (456 points) to end at 20,491.

Elsewhere, share prices dropped around three percent in Shanghai, Sydney, Wellington, Taipei and Manila.

The dollar was selling at 77.83 yen in currency trading, down six-tenths of a yen (0.57 yen) from late Friday.

Mideast markets closed down sharply on Sunday, including a 7 percent plunge for the Tel Aviv stock exchange.

U.S. Treasury Secretary Timothy Geithner says the S&P used "terrible judgment" when it downgraded the U.S. credit rating last week from the top triple-A grade. Geithner told CNBC television that the S&P showed a "stunning lack of knowledge" about the mathematics used to draw up a federal budget.

The downgrade signals that the S&P believes U.S. government bonds are now a riskier investment. S&P Managing Director John Chambers predicts another possible downgrade as soon as six months from now.

But Geithner said the United States has a very resilient and strong economy. He said U.S. treasuries are an absolute safe investment and that there is no risk of the United States not being able to meet its obligations.

The other two major credit rating agencies, Moody's and Fitch, have so far kept the U.S. AAA rating.

S&P defended its decision to drop the credit rating. It blamed Congress for months of political haggling over a deficit reduction deal that S&P says does not go far enough. The deal calls for cutting the deficit by more than $2 trillion over 10 years. S&P called for $4 trillion in savings.

Geithner said Sunday he will not resign. He was considering leaving the job when the debt ceiling debate in Congress ended. A White House spokesman said President Obama is pleased that Geithner will remain at his post.

Republican Senator Rand Paul and Congresswoman Michelle Bachmann, a Republican presidential candidate, have both publicly demanded that Geithner quit, holding him and the Obama administration responsible for the lowered credit rating.