Fitch Ratings has cast doubt on whether the budget discipline pact that European states intend to adopt will be able to solve the eurozone debt crisis.
"Fitch has concluded that a comprehensive solution to the eurozone crisis is technically and politically beyond reach" following the crisis summit at which the pact was announced, the ratings agency said.
While it praised announcements that private bond holders would no longer be asked to accept losses and the eurozone's permanent bailout fund would be brought into operation sooner, Fitch said it was concerned by the absence of a credible financial backstop.
"In Fitch's opinion, this requires more active and explicit commitment from the European Central Bank to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent euro area member states," it said.
The European Central Bank (ECB), supported by Germany, has resisted stepping up its limited purchases of bonds of eurozone states, let alone explicitly taking on the role of a lender of last resort to governments.
The markets have welcomed the idea of the fiscal pact to help lock in budget discipline in the medium term.
They have been looking for stepped-up involvement by the ECB to calm fears that countries such as Italy and Spain will be driven by high borrowing costs into needing bailouts.
"In the absence of a comprehensive solution, the crisis will persist and likely be punctuated by episodes of severe financial market volatility," Fitch said.
It warned that such market volatility "is a particular source of risk to the sovereign governments of those countries with levels of public debt, contingent liabilities and fiscal and financial sector financing needs that are high relative to rating peers".
Fitch affirmed France's top Triple A credit rating on Saturday but warned it could downgrade six other nations that also use the euro - Italy, Spain, Ireland, Belgium, Slovenia and Cyprus. Three of the eurozone's 17 nations have already received bailouts - Greece, Ireland and Portugal.
Investors fear Italy and Spain's borrowing costs have risen so rapidly they could also need financial aid.
Meanwhile, Moody's has cut Belgium's credit rating, citing tough conditions for indebted European countries to borrow with little chance of a quick end to the eurozone crisis. Moody's cut the rating to Aa3 on Saturday, with a negative outlook, from Aa1.
The firm also cited "increasing medium-term risks to economic growth" because of ongoing deleveraging in the eurozone.
"The first driver underlying Moody's decision to downgrade Belgium's debt rating is the fragile sentiment surrounding sovereign risk in the euro area," the agency said.
"The fragility of the sovereign debt markets is increasingly entrenched and unlikely to be reversed in the near future."
Moody's also warned about the Belgian Government's potential exposure to liabilities from Dexia, the troubled bank. Belgium, France and Luxembourg decided in October to dismantle Dexia with Belgium agreeing to pay €4 billion ($6.8 billion) to nationalise its domestic retail unit.
- AFP, AP