Fitch Ratings cut Spain’s credit ratings to AA+ from AAA on Friday, saying its economic recovery would be more muted than the government forecast, pushing world equities and the euro lower.

The downgrade follows a cut by another agency Standard and Poor’s last month and heaps more pressure on the government, battling to reassure markets its fiscal, political and social woes will not end up in a Greek-style debt crisis.

Fitch said Spain’s deleveraging of record-high levels of household and corporate debt and growing levels of government debt would drag on economic growth.

“The downgrade reflects Fitch’s assessment that the process of adjustment to a lower level of private sector and external indebtedness will materially reduce the rate of growth of the Spanish economy over the medium-term,” Fitch’s analyst Brian Coulton said in a statement.

Read More: – Reuters

Deputy finance ministers and central bankers of the 16 countries sharing the European single currency decided that any emergency loans would be made on terms almost identical to standard IMF bailouts if Greece needed them, an EU source said.

“A deal has been reached,” the source with close knowledge of the discussions told Reuters. “It is almost a carbon copy of International Monetary Fund terms.”

But the news brought only momentary relief on credit markets because Fitch Ratings cut Greece’s credit rating to BBB- and signaled further downgrades are possible, citing intensifying fiscal challenges in the debt-plagued country.

New figures published on Friday highlighted a deepening recession that will further aggravate those problems as the government continued to resist market pressure to seek outside help with its debt crisis.

Read More: – Reuters

Greece’s four largest lenders, including National Bank of Greece SA and EFG Eurobank Ergasias SA, had their credit ratings lowered at Fitch Ratings, which said the country’s economic crisis will hurt asset quality.

Fitch cut the long-term issuer default ratings of Alpha Bank SA, EFG Eurobank, National Bank of Greece and Piraeus Bank SA one step to BBB, the second-lowest investment grade rating, from BBB+, with a negative outlook, it said in a statement today. The short-term default rating was cut one level to F3, the lowest investment-grade rating, from F2.

Concern that Greece will struggle to finance its deficit has roiled financial markets since the country revealed it had a budget shortfall of 12.7 percent last year. Greece is targeting cutting the deficit to 8.7 percent this year. That is likely to affect the Greek banks’ asset quality, which may lead to higher credit costs and lower underlying profitability, Fitch said.

Read More: – By Niklas Magnusson, Bloomberg

U.S. prime jumbo mortgages backing securities at least 60 days late rose to 9.6 percent in January from 9.2 percent in December, the 32nd straight increase for “serious delinquencies,” according to Fitch Ratings.

“The trend line for delinquencies indicates the 10 percent level could be reached as early as next month,” Vincent Barberio, a Fitch managing director in New York, said today in a statement. The rate of non-performing loans almost tripled in 2009.

Read More: – by Jody Shenn, Bloomberg