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S&P added that its sovereign ratings were "forward-looking assessments of credit risks provided to investors".

Louise Cooper, markets analyst at BGC Partners, is tickled by S&P's warning that Italy's "fragile government" means it will struggle to deliver its deficit-reduction plans:

Those distractions include court cases, young women and sex parties, allegations of bribery and corruption and now even the BBC is suing his media company over a pornographic version of

Austerity comes as naturally to Berlusconi as widows and orphans trading in derivatives.

Carlo Maria Capistro - chief prosecutor of Trani, a small Adriatic port - told Reuters then that his office was checking to see whether the ratings agencies "respect regulations as they carry out their work".

Stock markets around Europe have emphatically shrugged off the Italian debt downgrade, my colleague Alex Hawkes reports.

The Wall Street Journal has written a very sobering article today about the increase in the suicide rate in Greece since the financial crisis began.

This has led to a 40% increase in suicide deaths this year, with roughly six in every 100,000 people choosing to take their own life. Counselling services have also reported a sharp rise in calls.

The yield on 12-month bonds rose to 3.591%, up from 3.335% a month ago. For the 18-month bills, the yield jumped to 3.802% from 3.592% in August.

Fubini says the message from the agency is clear: "If Italy does not change - and fast - public and private debt will cost (and weigh) progressively more."

Greek finance minister Evangelos Venizelos has just announced that he will hold another conference call with International Monetary Fund, the EU and the European Central Bank, at 5pm GMT.

Italian government debt has fallen in value this morning, pushing up the interest rate (or yield) on the bonds.

Berlusconi added the his government is planning new measures to boost the economy - indicating that S&P was wrong to cut its annual growth forecast to just 0.7%.

The miserable failure of EU leaders to tackle the problems posed by Greece does little to inspire any confidence that the much larger and more urgent problems faced by Italy would be managed any better.

S&P's downgrade comes just six days after the Italian parliament voted for a tough austerity package that it designed to eliminate Italy's budget deficit by 2013. Those tax rises and spending cuts were meant to avoid a downgrade, but S&P isn't convinced, for three reasons:

Third, market interest rates are anticipated to rise.

S&P's announcement came as