The European Commission has said credit rating agency rules must be changed further to make the sector more diverse, cut over-reliance on ratings and to deal with remaining conflicts of interest. This came as both Spain and Greece reacted to downgrades of their credit rating.

'The last few days highlight once again how important a more and better regulated environment for ratings are,' Economic and Monetary Affairs Commissioner Olli Rehn and Internal Market Commissioner Michel Barnier said in a joint statement.

Spain's Finance Minister Elena Salgado said today she had 'differences' with a Moody's downgrade of Spain's credit rating, which was blamed on banking woes and wayward regional government finances.

Moody's cut the sovereign long-term credit rating by a single notch to 'Aa2' and assigned a negative outlook, meaning it could be downgraded again.

The agency expressed scepticism about Madrid's assumption it can clean up savings banks' balance sheets at a cost of less than €20 billion. This evening, the country's central bank said its banks would need just over €15 billion.

But Salgado said that she had 'differences' with Moody's decision. The agency's doubts about the costs of cleaning up banks could have been resolved 'simply by waiting until this afternoon for the Bank of Spain to confirm the necessary amounts,' she said.

The finance minister agreed however that more should be done to control spending by semi-autonomous regional governments. 'Yes, we do have to make greater efforts to control the (public) deficit and this has to be done in particular by the regional governments under our supervision,' she said.

In a statement, Moody's said it had also taken action because it feared Spain's massive bank restructuring plan would cost too much.

The statement said Moody's expected 'the eventual cost of bank restructuring will exceed the government's current assumptions, leading to a further increase in the public debt ratio'.

It voiced 'concerns over the ability of the Spanish government to achieve the required sustainable and structural improvement in general government finances, given the limits of central government control over the regional governments' finances'.

It also cited 'the background of only moderate economic growth in the short to medium term'.

Moody's removed Spain's top Aaa rating in September last year and said in December it was looking at a further downgrade.

Greece wants 'urgent' action on rating agencies

Greece's finance minister has called for 'urgent' steps by the euro zone to regulate credit rating agencies after the country was hit with a damaging downgrade by Moody's earlier this week.

'I believe this is a matter that must be urgently addressed at eurogroup and ecofin level,' Finance Minister George Papaconstantinou said in a letter to senior European Commission, euro zone and European Central Bank officials.

The letter, released by the minister's office today, noted that the agencies were 'competing against each other' to predict the next crisis after failing to warn beforehand of the 2008 economic downturn.

It was addressed to euro zone finance ministers chairman Jean-Claude Juncker, ECB president Jean-Claude Trichet and European Commissioners Olli Rehn and Michel Barnier.

Moody's on Monday slashed Greece's credit rating by three notches from Ba1 to B1 and struck again today, demoting Spain by a notch to Aa2.

The latest downgrade came on the eve of a euro zone summit in Brussels to discuss bolstering the euro's defences amid increasing speculation that weak economies such as Portugal may follow Ireland and Greece and need massive bail-out.