Australian shares have opened lower after Spanish bonds yields rose and Moody's placed Germany, the Netherlands and Luxembourg on a negative ratings outlook.
Moody's says the three nations are increasingly likely to be called upon for more funding for other eurozone members, including Italy and Spain.
It also says the countries are heavily exposed to a Greek exit from the eurozone, and that Germany's banks are particularly vulnerable to a worsening of the eurozone crisis due to their exposure to Italy and Spain.
Overnight, .
The Dow Jones Industrial Average was off by a more modest 0.8 per cent.
In early trade, the Australian share market has lost another 0.2 per cent by 11:35am (AEST), after which was the biggest in seven weeks.
The major miners have continued to decline, with Rio Tinto down 1 per cent to $51.00 and BHP Billiton off 0.3 per cent to $30.47.
Fortescue shares dropped another 4.2 per cent to $3.88, marking its third straight day of heavy losses.
The major banks were also lower, with most down 0.3 per cent and ANZ off 0.7 per cent.
Woolworths and Wesfarmers continued yesterday's gains, with both up by around 0.8 per cent.
Billabong surged 21 per cent to $1.33 after it received a from private equity firm TPG pitched at $1.45 a share.
Overall, the All Ordinaries index was down 0.2 per cent to 4,151, and the ASX 200 down 7 points to 4,122.
The Australian dollar has eased to 102.7 US cents, and come off recent peaks against the euro to trade at 84.65 euro cents.
