Moody's Investors Services cut Portugal's debt rating by four-notches to A3, from Junk along with citing the country's outlook to negative as the rate agency forecast the country to suffer from weak growth due to government deficit-reduction plans and the need to recapitalize banks.

Moody's said in a statement yesterday that The government faces significant challenges, not least a less supportive economic environment, adding that GDP is forecast to decline this year and experience a weak recovery at best in 2012.