Fellow ratings agency Standard and Poor’s had already announced that it is considering downgrading the debt of 15 of the 17 eurozone countries, including the bloc’s Triple-A-rated champions like France and Germany.
European stock markets slid following Moody’s warning, with London’s FTSE 100 index down 0.38 percent to 5,508.20 points, Frankfurt’s DAX 30 down 0.69 percent to 5,945.19 and in Paris the CAC 40 down 0.67 percent to 3,150.84.
“The absence of measures to stabilise credit markets over the short term means that the euro area, and the wider EU, remain prone to further shocks and the cohesion of the euro area under continued threat,” Moody’s said.
“In view of the continued absence of decisive policy measures despite the recent euro area summit, Moody’s Investors Service reiterates its intention to revisit the ratings of all EU sovereigns during the first quarter of 2012.”
Asian markets had risen in earlier trade on Monday as investors cautiously welcomed last week’s agreement by 26 of the 27 EU members to introduce tougher fiscal rules in a bid to save the eurozone.
However, traders remained nervous. Britain chose not to join the deal and France’s main opposition candidate Francois Hollande said he would renegotiate it if he succeeds in ousting President Nicolas Sarkozy in a May vote.
Moody’s said last week’s hard-fought early morning announcement by EU policymakers offered “few new measures”, suggesting that it expects more trouble on the bond markets for Europe’s sovereign debtors
“The announced measures therefore do not change Moody’s previously expressed view that the crisis is in a critical and volatile stage, with sovereign and bank debt markets prone to acute dislocation which policymakers will find increasingly hard to contain,” the statement warned.
Stock market analysts at Saxo Banque, said traders were “pessimistic” after Moody’s warning.
In a note to investors, they said that while the EU summit had “done everything it could to stabilise markets in the long term … almost nothing was done for the short term.”