Ratings giants hit eurozone

Belgium became the latest euro-zone nation hit by a sovereign-debt downgrade, as Standard & Poor's cut its rating by one notch Friday, citing a slowing economy and "protracted political uncertainty", The Wall Street Jourlal reports.

The credit-ratings company cut Belgium's long-term sovereign-credit rating to double-A from double-A-plus, leaving it two steps below the coveted triple-A rating. The outlook is negative.

Caretaker Prime Minister Yves Leterme and Finance Minister Didier Reynders reacted to the decision by saying the downgrade was a result of rising borrowing costs across the region. But they said the move underlined the importance of politicians finally agreeing to a budget deal for 2012 that would cut the deficit.

Belgium has been without a federal government since elections in June 2010. Disagreements over how to fund €11.3 billion ($15.2 billion) in savings next year have frustrated the most recent push by six parties to agree to a government.

The rating downgrade forced Belgium's outgoing premier to issue a 48-hour deadline to end a world-record political crisis before markets re-open. The decision underlined a sharp escalation of the debt crisis in a week when Germany struggled to raise finance and concern grew that the euro currency was close to breaking-point in the absence of radical pan-eurozone action, The Economic Journal reports.

Meanwhile, another rating agency, Fitch, cut the ratings of eight Italian mid-sized banks on Friday, citing rising funding costs for banks among downside risks as Italy faces recession, Reuters reports.

Fitch said the eight banks, including cooperative lenders such as Banca Popolare di Milano and Banca Popolare dell'Emilia Romagna, might be forced to revise their medium to long-term capital targets as they face an increase in the cost of funding and a deteriorating credit quality.