Moody's Investors Service has cut the credit rating of Spain and Cyprus as the markets brace for Sunday's parliamentary elections in Greece, which could take the country out of the eurozone and undermine the European common currency.

On Wednesday, Moody's cut its rating on the Spanish government debt by three notches despite the $125 billion loan the eurozone leaders approved last week to help Spain's ailing banks. The rating agency cited Spain's “very limited” access to international debt markets and the weakness of its economy.

Moody's also downgraded Cyprus's government bond ratings by two notches , citing the nation's close links to Greece.

The agency says further downgrades for both countries are possible.

Financial markets fear Greece could exit the eurozone if parties opposed to austerity measures in exchange for international bailout funds prevail in Sunday's vote.

Greece's political parties failed to form a new coalition government after parliamentary elections last month, necessitating the repeat ballot.

In Italy, Prime Minister Mario Monti has appealed to politicians in Rome to back his tough economic measures in order to prevent their country from becoming the next victim of the euro debt crisis.

Monti urged parliament Wednesday to redouble their efforts to avoid that fate.