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Geopolitical strain dogs European mid-term sovereign outlook, Scope says

Scope Ratings stated?on Wednesday that a challenging geopolitical climate compounded with unfavourable political crosswinds in Europe weighs on the'region's?medium-term sovereign credit prospects, even though the continent continues to demonstrate economic and fiscal resilience.

Alvise Lennkh Yunus, Scope Ratings' head of sovereign and?public?sector, said that the U.S. - Europe Greenland Crisis and the reemergence of uncertainty in EU-U.S. trading relations were critical to?the European sovereign outlook.

Lennkh Yunus stated that the main threat to Europe is its security, fiscal and energy position, and EU cohesion rather than an immediate large economic hit. He added that any direct economic impact should be manageable.

Lennkh Yunus, Scope's CEO, said that the?baseline is a generally resilient European credit outlook with "rating convergence" and "cautious optimism about growth and fiscal position".

EU ASSUMES it can rely on the US

Eiko Sievert is the executive director of Scope Ratings. She said: "The White House's destabilizing?approach towards its traditional allies"

Sievert said that a large and coordinated sale of U.S. assets was unlikely even though European nations, along with Japan and China, held large shares?of outstanding U.S. Treasury bonds.

The report warned that such a scenario would trigger fire sales, affect investors' portfolios, and destabilise global financial systems. (Reporting and Editing by Madeline Chambers and Rene Wagner)

(source: Reuters)