Markets dip as Moody's takes shine off Greek relief

The euro fell 0.2 percent to $1.3162, off Monday's high of $1.3284, while the British pound continued its descent on Moody's news, falling 0.4 percent to $1.5710.

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"Asian markets actually followed the news about downgrades in those European countries, as markets realised there is no resolution yet and revived worries over the European problem," said Frances Cheung, senior strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.

"The negative outlook to the UK, which was previously quite immune because it is not a member of the euro zone, also created a little bit of concern, because it seems it is affected."

The Moody's announcement weighed on market sentiment already turning sceptical about Athens' ability to pursue harsh reforms in exchange for crucial aid.

The passage of the austerity steps was only one condition for granting a new 130 billion-euro bailout, a lifeline for Greece to ride out a major bond redemption on March 20.

Europe gave Greece until Wednesday, when euro zone finance ministers are expected to meet, to convince sceptical international creditors that it would stick to the promises.

Athens must also specify how 325 million euros of the 3.3 billion euros demanded in budget savings will be achieved and Greek political leaders must give a written commitment to implement the terms of the deal.

Provided there are no further setbacks at the EU meeting on Wednesday, terms of a bond swap deal with private bond holders to ease Greece's debt burden would then be announced.

"Market uncertainty remains high, since a number of steps remain to ensure that there is no disorderly default in the near term," Barclays Capital said in a note, adding that Greek parliamentary elections in April would make implementation risks of the austerity measures particularly challenging.

"We think the current environment favours relative value trades that are less directional on overall market risk appetite," it said.