ATHENS, Greece - June 13, 2011 - Greece's recovery plans have suffered another hammer blow after Standard & Poor's cut the country's credit rating because of "a significantly higher likelihood of one or more defaults".

The rating agency reduced the long-term rating on Greek sovereign debt from B to CCC - only four notches above default. It added that in its view the country's credit outlook was "negative".

The yield on 10-year bonds issued by Greece has soared to 16.9% and the country's sovereign debt is now the lowest rated in the world, ranking below Ecuador, Jamaica and Grenada. The move also impacted Portuguese and Irish bonds, which are experiencing similar problems to those of the Hellenic nation.

The downgrade triggered an angry response from the Greek finance ministry, which claimed Standard & Poor's decision was made on the basis of "rumors and statements by representatives of the European Commission and European Central Bank.

"However, the decision ignores the intense consultations taking place between the same institutions and the International Monetary Fund, aimed at designing a viable solution that will cover the financing needs of Greece in the coming years," added the ministry.

The statement added that the Greek government had shown "determined efforts" to "avoid at any costs" a default or restructuring of its debt repayments, as well as a "strong desire" to stay within the eurozone. It pointed to the tough fiscal strategy submitted to the Greek Parliament last week as evidence of its commitment to economic reforms.

It added, "In any case, the government remains determined to implement the difficult policies required for Greece to exit the crisis."

The statement came as the euro fell again amid fears that European leaders would not be able to agree on terms for Greece's new bailout - its second in 14 months.

Traders are alarmed by the division between Wolfgang Schaeuble, Germany's finance minister, who wants Greek bondholders to extend the maturities on the seven year debt, and Jean-Claude Trichet, president of the European Central Bank, who has argued that any restructuring is the same as a default.

European and international officials are scrambling to agree on a plan to stem Greece's debt crisis by the end of June.