Fitch cuts rating of five eurozone countries

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Rating agency Fitch cut its ratings of five eurozone countries including Italy and Spain and lowered its outlook on Ireland, citing their poor finances and vulnerability to sharp turns in market sentiment.

Fitch dealt full downgrades to Italy, Spain, Belgium, Slovenia and Cyprus, and cut its outlook on Ireland, saying the ‘near-term economic outlook highlight(s) the greater vulnerability to monetary as well as financing shocks faced by these sovereign governments’.

Italy, Spain and Slovenia all were cut by two notches, with Fitch citing Italy faced too-slow growth against its rising debt and Spain faced "a significantly worsened fiscal and economic outlook."

Fitch said it had weighed ‘the marked deterioration in the economic outlook’ in the eurozone against successful efforts by the European Central Bank to ease the pressure on fiscally troubled governments and commercial banks.

"Nonetheless, 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 sovereign governments in the absence of a credible financial firewall against contagion and self-fulfilling liquidity crises."