By Nathan Andrada

London, United Kingdom

Moody's Investors Service cuts its outlook for three European nations with triple-A ratings -- Germany, the Netherlands and Luxembourg -- rating them negative from stable as more uncertainty in the euro-zone debt crisis unfolds.

The ratings agency stated that their action was based on the increasing risk factors in the euro zone particularly that of Greece. It said that the likelihood that Greece will eventually leave the euro zone has increased in the last few days, in which Moody's described as an event that would result in a series of shocks in the financial sector and would be too costly for the policymakers to contain.

Moody's also predicted that should the Greek exit be averted, chances are that collective support to bail out other euro area sovereigns like Italy and Spain will also become necessary.

On the recent government bond auction, Spain's short-term borrowing costs increased where the country now needs to pay an interest rate of 3.691 per cent for their six-month debt -- higher compared to the 3.237 per cent rate just a month ago. Investors' concerns about the country are still present, indicated by the yields in the Spanish 10-year bonds that remain at near record-high levels of 7.55 per cent.

Despite Moody's downgrade on her country's top credit rating, German Chancellor Angela Merkel remains confident that her country will retain its position as Europe's haven in the financial crisis.

Germany is Europe's biggest economy and has been the leading figure in combating the crisis that has engulfed the currency bloc for almost three years now. However, the Germans are under intense pressure to do more to keep the euro intact as the Greeks come to terms with austerity measures and the Italians and Spaniards deal with rising borrowing costs.

Moody's, meanwhile, affirmed Finland's AAA rating and maintained its stable outlook, although it said that the country along with Germany, the Netherlands and Luxembourg are affected by whatever uncertainty that comes out of the euro zone debt crisis.

World - Moody's Lowers Outlook for Germany, Two Others from Stable to Negative | News of the World