Rodrigo Campos and Walter Brandimarte New York

Moody’s Investors Service might cut the triple-A ratings of France, Britain and Austria, the rating agency warned on Monday. It downgraded six European nations, citing growing risks from Europe’s debt crisis.

Moody’s move was less aggressive than that of rival Standard & Poor’s (S&P), but it puts London’s prized credit rating in jeopardy for the first time.

The agency was worried about Europe’s ability to undertake the reforms needed to address the crisis and the amount of funds available to fight it. It also said the region’s weak economy could undermine austerity drives by governments to fix their finances.

The euro and sterling fell after the news, as did European and US equity indices.

The US rating agency said it had changed the outlooks for the ratings of France, Britain and Austria to negative. Moody’s described Germany’s top-tier rating as “appropriate”, and it affirmed the triple-A rating on the European Financial Stability Fund (EFSF).

Moody’s cut the ratings of Italy, Portugal, Slovakia, Slovenia and Malta by one notch. It cut Spain by two notches.

The scope of the downgrades was limited due to “the European authorities’ commitment to preserving the monetary union and implementing whatever reforms are needed to restore market confidence”.

At the weekend, Greece’s parliament approved a new round of budget cuts in the hope of securing new bailout funds and avoiding a default in March.

Bart Oosterveld, the managing director at Moody’s sovereign risk group, declined to comment on the state of the talks between Athens and its creditors, but said if Greece left the EU, the effect on financial markets and credit ratings “would be quite profound”.

And he warned that European credit markets might still deteriorate despite efforts by the European Central Bank to ease financing pressures with its three-year refinancing plan.

The rating outlooks of the nine countries affected by Moody’s action was set to negative, “given the continuing uncertainty over financing conditions… and its corresponding impact on creditworthiness”.

British Finance Minister George Osborne responded by saying the country must keep its promise to slash its large budget deficit. “This is a reality check for anyone who thinks Britain can duck confronting its debts,” he said.

Moody’s move on Monday follows one last month by S&P that stripped France and Austria of their triple-A status, while Italy, Spain, Portugal, Cyprus, Malta, Slovakia and Slovenia were downgraded. S&P cut the EFSF by one notch.

Also in January, Fitch downgraded the sovereign credit ratings of Belgium, Cyprus, Italy, Slovenia and Spain, indicating there was a one-in-two chance of further cuts in the next two years. – Reuters