Moody's Investors Service Friday said it would finish reviewing Italy's Aa2 sovereign currency credit rating for possible downgrade within the next month, saying the country faces a challenging economic and financial environment.
Moody's cited the fluid political developments in the euro area, which is struggling with a deepening sovereign debt crisis.
The credit rating remains on review for possible downgrade, which Moody's put in place in June.
Italian bank UniCredit shed 7 percent even though the overall market was higher for a fourth straight day. Traders cited speculation that Moody's would downgrade Italy as one reason for the weakness in European bank shares.
In June, Moody's cited a rigid labor market and Italy's rising debt financing costs.
Italy has one of the largest public debt burdens in the world, equivalent to about 120 percent of gross domestic product. After Greece, that is the largest ratio in the 17-country euro zone.