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The EU's top economic official has criticized a decision by Standard & Poor's to downgrade the credit ratings of nine eurozone countries.
Economic affairs commissioner Olli Rehn said the move by the credit ratings agency was "inconsistent" as the eurozone was taking "decisive action" to end the debt crisis.
Michael Barnier, the European commissioner in charge of internal markets, said he was "surprised at the moment chosen" by S&P and "its evaluation which does not take into account recent progress."

EU leaders agreed in December to negotiate a pact designed to increase budgetary discipline.

After a day of rumors as to which countries would be affected and to what degree, S&P announced late on January 13 that it was downgrading the ratings of nine European countries.

The U.S.-based agency lowered the ratings for Cyprus, Italy, Portugal, and Spain by two notches and the ratings of Austria, France, Malta, Slovakia, and Slovenia, by one notch.

As a result, France and Austria both lost their top triple-A assessment.

Reduced ratings mean it will be more expensive for those countries to borrow and more of a challenge for them to overcome sovereign debt crises.

S&P did not downgrade its ratings for Estonia, Finland, Ireland, Luxembourg, the Netherlands, and Germany -- the eurozone's top economy.

The agency said that of the 16 countries reviewed, all except Germany and Slovakia have negative outlooks, meaning more downgrades are possible in the coming years.

'Not A Catastrophe'

S&P said that agreement "has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems."

In the hours before the agency's official announcement, and after emergency talks with President Nicolas Sarkozy, French Finance Minister Francois Baroin confirmed downgrade in a television interview.

"Yes, I confirm that France has received, like most euro zone countries, a notification of a change of its rating. It's a downgrade, a one-notch change. It's the same agency that downgraded the United States [from its triple-A status in August 2011]," he said. "It had warned us, so it's a half-surprise."

S&P had warned 15 European nations in December that they were at risk for a downgrade.

Baroin sought to downplay the impact of the ratings change, calling it "bad news" but not "a catastrophe." He also said the change would not lead to new austerity measures.

France's new rating is still considered "investment grade." That means French government bonds are still rated as having a relatively low risk of default.

German Finance Minister Wolfgang Schaeuble said that despite the downgrade, "France is on the right track."

While the downgrades are not expected to cause an immediate, sharp worsening of the eurozone's financial woes, the French downgrade is seen as most damaging.

Paris is the second-largest contributor to the currency union's bailout fund, the European Financial Stability Facility.

In a statement, Luxembourg Prime Minister Jean-Claude Juncker said the eurozone was determined to maintain the fund's triple-A rating.

Earlier, amid reports on the impending downgrade, the euro fell to a 17-month low and world stocks also fell.

In another setback for the eurozone, January 13 negotiations broke down a debt swap by private creditors that was seen as key to avoiding default by Greece, the bloc's most cash-strapped country.

Officials said more talks are likely next week.

compiled from agency reports

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