France and Austria lost their top-rated credit standings, while Italy sank lower Friday in the latest fallout from Europe's two-year governmental debt crisis.

France and Austria had been among six that use the common euro currency that maintained a top AAA rating. But late Friday they both reported that Standard & Poor's, one of the world's three key credit-rating firms, had downgraded their ratings by one notch to AA+.

The agency downgraded Italy by two notches from A to BBB+.

French Finance Minister Francois Baroin called the downgrade “bad news,” but not “a catastrophe.” He said ratings agencies would not dictate French economic policies.

The New York-based financial services firm made no announcement about the change in its credit ratings pending the end of Friday stock trading in the United States. But European news accounts said that the four other eurozone nations with AAA ratings — Germany, Luxembourg, Finland and the Netherlands — would not be downgraded.

German Finance Minister Wolfgang Schaeuble said the downgrades were not a surprise, but that the markets can deal with them.

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“Markets have learned to live with the fact that agencies rate differently. This week I heard an assessment from one of the large rating agencies which said that France's AAA rating would not be in doubt at all this year. The markets deal with this. Reliable mid-term politics is more important than daily decisions of markets and we are collectively doing this in the euro zone.''

Schaeuble also emphasized the importance of the European Union's decision to implement a stabilization mechanism as a permanent, stable institution with paid-in capital as quickly as possible.

The borrowing costs for France, the eurozone's second largest economy after Germany, and Austria could increase on the premise that they are now less creditworthy. But U.S. borrowing costs actually fell last year after the S&P knocked the American government's credit rating down one level.

S&P had warned last month that 15 of the 17 eurozone nations were at risk of a downgrade. It was not known whether S&P downgraded any other countries beyond France and Austria.

Three eurozone nations — Greece, Ireland and Portugal — have already been forced to secure international bailouts during the debt crisis, but Greece's efforts to secure a new $165 billion assistance package appeared to be in jeopardy on Friday.

A Greek financial official predicted on Thursday that the Athens government would complete negotiations by the end of next week, with its private creditors to cut the amount of debt it owes them by about $127 billion. But talks between government officials and those representing large banks ended in a stalemate late Friday.

A global banking group, the Institute of International Finance, said the negotiations have been “paused for reflection” and that the two sides have “not produced a constructive consolidated response.”

European leaders have warned Greece it will not receive the new bailout unless it reaches agreement with the creditors and imposes new unpopular austerity measures.