The market remains skeptic of the ability of the euro area to get its house in order and now the fear expanded with Italy suffering a new credit downgrade.

Standard & Poor's cut Italy's credit rating by one notch to A from A+ with a negative outlook on fear the weakening growth and the fragile government will not be able to cut the second biggest debt load in the euro area according to the statement from S&P last night.

S&P's decision was the first as Moody's said it will need another month to decide on the coming action. S&P sees the fragile government as a major obstacle to containing the fiscal imbalance and will limit the ability of the government to respond decisively to challenging domestic and international pressures.

The weak economic environment also played a major role in S&P's decision where the agency lowered its growth outlook to 0.7% annual average for 2011 to 2014 down from earlier forecasts for 1.3%.