Investors are painfully aware that Europe's debt troubles are far from resolved and the world's major credit agencies are loudly reminding - and are expected to do so again this week - that sticking one's head in the sand is no answer.

On Friday, Moody's Investors Service slashed Belgium's credit rating by two notches, lowering it to Aa3 from Aa1 with a negative outlook.

The same day Fitch Ratings warned it might downgrade credit ratings for Belgium, as well as Spain, Italy, Slovenia, Ireland and Cyprus within three months, because of Europe's inability to come up with a "comprehensive solution" to the debt crisis.

While Fitch affirmed France's top notch credit rating, it warned a downgrade was possible within two years.

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"Of particular concern is the absence of a credible financial backstop," the credit rating agency said. "In Fitch's opinion this requires more active and explicit commitment from the ECB to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent Euro Area Member States."

It seems increasingly likely that France, and perhaps Germany, will see their credit ratings downgraded as early as this week by either Moody's or Standard & Poor's.

Both equities and the euro suffered and investors sought refuge in US Treasuries.

Last week, the Standard & Poor's 500 Index shed 2.9 per cent, the Dow Jones Industrial Average dropped 2.7 per cent and the Nasdaq Composite Index lost 3.5 per cent. In Europe, the Stoxx 600 Index fell 2.8 per cent for the week.

"Investors are tired of headlines coming out of Europe and tired of the fact that there isn't a cohesive solution. But then, it's never one way or the other so they can't just ignore them," Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York told Reuters.

Europe's headache has turned into a global migraine few can afford to ignore. And there could be more trouble ahead. The economies of France and Ireland are struggling, data showed on Friday. And Greece is still trying to convince private holders of its debt to accept a huge haircut - so far without success.

The rising cost of debt is a constant concern. Even as Italy's new Prime Minister Mario Monti won a confidence vote in the lower house of parliament on a 33 billion euro austerity package, the nation saw its bond yields climb back above 7 per cent. The Senate is expected to vote on the measures in the days ahead.

The euro, which weakened 2.6 per cent against the greenback last week, might continue to suffer.

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Futures traders increased their bets to a record level that the euro will decline against the US dollar, Bloomberg News reported, citing figures from the Washington-based Commodity Futures Trading Commission.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain - so-called net shorts - was 116,457 on December 13, compared with net shorts of 95,814 a week earlier, according to Bloomberg.

The trouble of course isn't limited to Europe. American companies have felt the effects of a recovery that remains in doubt as Europe's fiscal crisis is crimping growth globally.

There have been 97 negative earnings preannouncements issued by S&P 500 corporations for the fourth quarter, compared to 26 positive preannouncements, resulting in a negative-to-positive ratio of 3.7. That's the highest in 10 years, according to Thomson Reuters data.

All of the uncertainty has bolstered demand for US Treasuries. Last week the yield on the US 30-year benchmark dropped 26 basis points to 2.85 per cent.

"The appetite for Treasuries remains the biggest on the planet," Paul Montaquila, head of fixed-income trading in San Ramon, California at Bank of the West, told Bloomberg News. "The uncertainty about what's going on in Europe is superseding everything else. Treasuries continue to be the No. 1 asset to have."

As trading volumes thin this week ahead of the Christmas break, there will be a few more indicators on the state of the world's biggest economy for investors to assess. On tap are reports on the housing market, the final reading on gross domestic product and durable goods orders.