European shares slid on Tuesday, extending recent losses after Fitch ratings agency forecast a "significant" downturn in the eurozone, and Moody's put eight Spanish banks on review for downgrade.
In morning deals, London's FTSE 100 index eased 0.07 percent to 5,424.02 points, Frankfurt's DAX 30 dipped 0.13 percent to 5,777.97 points and the Paris CAC 40 dropped 0.39 percent to 3,077.65.
The European single currency slipped to $1.3175 from $1.3188 late in New York on Monday, when it had fallen as low as $1.3161 -- which was the lowest level since October 4.
Asian markets mostly fell Tuesday, tracking losses on Wall Street as worries also grew that an EU deal to contain the eurozone debt crisis would not be enough.
"Markets are pausing for breath after yesterday's big sell off," said Capital Spreads boss Simon Denham.
"As we approach the year end 2011 will be a year that many will want to forget. A terrible year for stocks with the European debt crisis deepening and global growth slowing the outlook for 2012 isn't all that much better either."
Europe's main markets and the euro had tumbled on Monday as initial optimism over last week's EU summit gave way to pessimism that EU states can deliver what they promised.
Analysts said there remained many questions over last Friday's EU summit, in which 26 of the 27 EU member countries commited to tougher fiscal limits.
However, Germany's hopes for a treaty revision were dashed when Britain's Prime Minister David Cameron opted out of the plan by using his veto, saying he could not get the protection he wanted for the City of London financial centre.
Leaders also planned to pump 200 billion euros ($267 billion) into International Monetary Fund coffers to help the eurozone, which is struggling to boost its own rescue fund to one trillion euros.
Standard & Poor's is expected to pass judgement on the summit this week after putting 15 of 17 euro-member states -- including France and Germany -- on downgrade warning.
The agency had last week announced the AAA status of the EU itself was on credit watch.
Ratings agency Moody's added the eurozone debt crunch was in a "critical and volatile stage", while Fitch predicted a "significant" downturn in Europe.
"In the short term we predict a significant economic downturn across the region," Fitch warned on Monday.
"The eurozone faces intense market pressure, which is triggering loss of business and consumer confidence, and weak industrial activity and retail sales."
In another blow, Moody's warned that it might cut the ratings of a number of Spanish banks, citing both their real estate exposure and weaker ability to generate earnings.
"The rating agencies are firmly in charge now," said Jonathan Bristow, broker at Valbury Capital.
"Politics will hopefully take a back seat to the economists, as to avoid a eurozone-wide downgrade they will actually have to find a comprehensive solution to the debt crisis."
The concern, which weighed on the euro, was amplified by warnings from credit rating agencies, with Moody's Investors Service saying that the debt crunch was in a "critical and volatile stage".
Hong Kong dropped 0.69 percent, Tokyo closed down 1.17 percent, Sydney shed 1.40 percent and Seoul lost 1.88 percent, while Shanghai fell by 1.87 percent in value
Japan's finance minister Jun Azumi on Tuesday called the tighter fiscal discipline pact a "big step forward", but added there remained a lack of clarity around tackling the crisis and what role would be played by the IMF.
In Wall Street action on Monday, the Dow Jones Industrial Average slid 1.34 percent, while the broader S&P 500 lost 1.49 percent and the Nasdaq Composite shed 1.31 percent.