Debt, Europe Debt Crisis | featured news

Greece is unlikely to be able to pay what it owes and further debt restructuring is likely to be necessary, three EU officials said on Tuesday, a cost that would have to fall on the European Central Bank and euro zone governments.

Credit ratings agency Moody's Investors Service cut its rating on Spanish government debt on Wednesday by three notches to Baa3 from A3, saying the newly approved euro zone plan to help Spain's banks will increase the country's debt burden.

Moody's on Friday cut Belgium's credit rating by two notches, saying the euro zone debt crisis increases funding risks for countries with high public debt burdens.

After a series of positive announcement from Greek FinMin Venizelos, rumors that Moody's would downgrade French banks and Germany was preparing for a Greece to default send equities tanking, particularly French banks.

A top board member of the European Central Bank unexpectedly resigned on Friday in what analysts saw as further evidence of the deep divisions over how to resolve Europe’s growing debt crisis. The move immediately rattled European markets and the euro, which slipped to a six-month low against the dollar. The European Stoxx and German DAX indexes tumbled 3.5 percent.

Italy and Spain pass new measures as they battle to control their debts while Greece steps up its austerity plans.

By insisting that it receive collateral from Greece in return for aid, Finland threatens to upend an agreement that euro zone countries made in July to expand the E.U. bailout fund.

Fitch Ratings on Wednesday downgraded Greece deeper into junk territory, citing the absence of a new and fully funded financing program for the country.

The International Monetary Fund's executive board on Friday said it approved a disbursement of about 3.2 billion euros to help Greece pay debts due this month.

Nearly one-third of 91 European banks undergoing the latest round of public stress tests could need external support to be brought up to scratch, Moody's said.