By Keith Jenkins Dec. 8 (Bloomberg) -- The pound fell against the dollar and the euro after Moody’s Investors Service described the U.K. as weaker than top-rated peers including Germany and France. Britain and the U.S. had “resilient” Aaa ratings, as opposed to the “resistant” top ratings on Canada, Germany and France, Moody’s said in a report today. None of the top-rated countries was “vulnerable,” or had public finances that were “stretched beyond the point of ‘no return’ to the Aaa category,” according to the report. U.K Chancellor of the Exchequer Alistair Darling said yesterday the economy remains too fragile to take more steps to repair the deficit this year. “The Moody’s story was clearly one significant factor affecting sterling,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London, “Also the comments from Darling weighed on the currency.” The pound dropped 0.6 percent to $1.6354 as of 10 a.m. in London, and weakened 0.8 percent to 90.86 pence per euro. Darling said yesterday he would rather suffer criticism for removing support for the economy too late than too early, suggesting he will put off extra measures to reduce Britain’s biggest budget deficit since World War II. “While assumed capacity for fiscal adjustment currently supports the maintenance of the Aaa rating of the U.K. government, this assumption will have to be validated by actions in the not too distant future,” said Moody’s. Manufacturing Stalls The pound was little changed after a report showed U.K. manufacturing unexpectedly stalled in October, a sign the economy is struggling to shake off the longest recession on record. Factory output was unchanged after gaining 1.5 percent in September, the Office for National Statistics said today in London. Economists predicted a 0.4 percent increase, according to the median of 21 forecasts in a Bloomberg News survey. The data is unlikely to change the “bearish pound sentiment,” wrote Valentin Marinov, a senior foreign-exchange strategist at Commerzbank in London, in a research report. “Even if both releases point to a continuing recovery, we doubt that they will dispel investor concerns about further underperformance of the U.K. economy in the near term,” he wrote before the release of manufacturing data. To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net

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