UPDATE 1-Fitch affirms U.S. AAA rating but outlook still negative
NEW YORK, June 28 (Reuters) - Fitch Ratings on Friday affirmed the United States' top level credit rating at AAA but held the outlook at negative, citing still elevated debt levels that leave it vulnerable to shocks unless more deficit reduction measures are adopted.
The affirmation reflects strong economic and credit fundamentals, the firm said in a statement.
Fitch said it will conduct a further review of the credit rating by the end of 2013.
"The outlook remains negative due to continuing uncertainty over the prospect for additional deficit-reduction measures necessary to reduce government indebtedness over the medium to long term," Fitch said.
Fitch also said the negative outlook reflects "near-term risks associated with the expiration of federal appropriations authority at the end of the current fiscal year (30 September 2013) and in particular a timely increase in the debt limit."
On June 10, rival Standard & Poor's, which cut the U.S. credit rating to AA-plus from AAA in August 2011, revised its outlook on the credit to stable from negative, removing the near-term threat of a downgrade because of an improving economic and fiscal outlook.
Moody's Investors Service holds the U.S. rating at Aaa with a negative outlook, a position it has held since August 2011.
The firm highlighted the diversity of the U.S. economy, its "extraordinary monetary and exchange rate flexibility," global reserve currency status of the U.S. dollar as well as the depth and liquidity of its financial markets as underpinnings for the top credit rating.
"Fitch's current assessment is that the economic recovery is gaining traction as the headwinds from private sector debt deleveraging ease. This is underpinned by a pick-up in the housing market and gradual decline in unemployment," the firm said.