Moody's on Friday surprised markets by downgrading Italy's government bond rating by two notches to Baa2 and warned it could cut it further, piling on pressure just hours before the country launches its latest bond sale.
The move left Italy's rating just two notches above junk status and could raise already-painful borrowing costs.
The stark warning from Moody's, which highlighted Italy's vulnerability to political shocks in the euro zone and could deepen worries about the region's debt crisis, knocked the euro down about a quarter of a cent to $1.2190 in Asian trade.
Ireland to unveil stimulus package - FT.com
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