5 December 2011 Last updated at 17:23 ET S&P warns euro nations of possible credit downgrade The euro has fallen on the news Global Economy What's the matter with Spain? What's the matter with Italy? Is the euro about to capsize? How might Greece leave the euro? Standard and Poor's has put Germany, France and 13 other eurozone countries on "credit watch" due to fears over the impact of the debt crisis. S&P's move means that countries with top AAA ratings would have a 50% chance of seeing their rating's downgraded. The news came as a surprise to investors and saw stocks fall back on early gains as the euro also fell. S&P said there was "downward pressure" on the whole eurozone's credit standing. "Today's CreditWatch placements are prompted by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole," S&P said in a statement. Markets The only two countries not put on credit watch were Cyprus, which is already under review and Greece whose rating has already been severely downgraded. "Start Quote S&P says it wants eurozone leaders to understand how much is at stake if this week's summit is another damp squib. But if its actions were to set off a panic that were, for example, to tip a bank over the edge, then it could be accused of destabilising attempts to reform the eurozone in an orderly way. " End Quote Robert Peston Business editor, BBC News [HR][/HR] S&P's logical but tactless eurozone warning Early reports of the move had an impact on the financial markets. The benchmark Dow Jones index closed up 78.4 points having lost ground from far stronger gains earlier in the day. The euro fell 0.5% against the dollar to $1.338. Default fears A worse credit rating could make it harder for some eurozone countries to borrow money. Analysts say the move reflects uncertainty about what would happen were a larger eurozone country - such as Italy - to default in future. "This is very disappointing," said David Kohl, chief economist at Julias Baer in Germany. He said investors wanted to know that private lenders would be paid before other debts are serviced. "Financial markets are questioning where is the priority for government debt," he added. However other economists said the move was expected. "Start Quote You could imagine France losing its top credit rating - but nearly all the scenarios you could imagine it doing so would be ones in which the viability of the Eurozone itself was also considered to be at risk. " End Quote Stephanie Flanders Economics editor, BBC News [HR][/HR] Merkel's intriguing concession "From my perspective this was a long time coming, given all the issues and given the fact that they've made very little headway on the crisis," said Jacob Oubina, senior US economist at RBC capital markets. EU Summit The warning of a possible downgrade comes ahead of an EU summit on Friday to discuss plans to stabilise the eurozone. The leaders of France and Germany say the EU needs a new treaty to ensure countries control their debts in future. The French President Nicolas Sarkozy and German Chancellor Angela Merkel issued a statement on Monday following talks in Paris. It called for eurozone states to face greater checks on their budgets and sanctions if they run up deficits. However it fell short of suggesting common borrowing, guaranteed by all states which Germany fears could further undermine its own credit rating.