Poor outlook

Credit ratings agency Fitch on Friday downgraded its credit outlook for five eurozone countries, citing financing and growth fears as its reasons.

The ratings of major economies Italy and Spain dropped by two notches; Italy from A+ to A- and Spain from A to AA- status.

There was also a downgrade of two points for Slovenia, with Belgium and Cyprus both falling by one. The agency said that although governments had taken action on a national level to dispel market fears, it also had to take a poor economic outlook into account.

"Today's rating actions balance the marked deterioration in the economic outlook with both the substantive policy initiatives at the national level to address macro-financial and fiscal imbalances," said a statement on the website of US-based Fitch.

The agency also highlighted a collective failure to reach agreement on the wider eurozone crisis as a further motivation for the downgrade.

"The intensification of the eurozone crisis in the latter half of last year undermined the effectiveness of ECB monetary policy and highlighted the financing risks faced by eurozone."

Narrow escape for Ireland

Ireland maintained its triple-B rating, but was placed on Fitch's "negative outlook" list - indicating the likelihood of a future downgrade.

The announcement comes ahead of a European Union summit on Monday, aimed at finding a solution to mounting debt and poor growth.

Earlier this month, ratings agency Standard & Poor's (S&P) downgraded nine European countries, with France and Austria losing their top-notch triple-A ratings.

Italy, Spain, Portugal and Cyprus went down by two levels on the S&P scale, while Malta, Slovakia, and Slovenia each fell by one.

Author: Richard Connor (AFP, AP, dpa)
Editor: Nancy Isenson