LONDON, England - October 14, 2011 - Standard & Poor's Ratings Services has downgraded Spain a notch, citing increasingly unpredictable financing conditions that could squeeze a private sector already pressured by struggling economic growth.

The move comes as politicians in Slovakia finally voted to expand Europe's bailout fund, ending a nail-biting standoff that threatened the Greek rescue mission and rattled global markets.

S&P expects the Spanish economy will grow at about 1% in real terms next year, down from the 1.5% pace it forecast in February.

In downgrading the Iberian nation, S&P cited growing challenges for Spain's private sector, as it seeks fresh external financing to roll over high levels of external debt.

S&P now rates Spain at AA-, three steps below the top AAA rating. Its outlook is negative.

Asian stocks retreated as the downgrade reignited fears about the debt crisis while investors also fretted after several European banks had their credit ratings cut and JPMorgan Chase reported that a slowdown in investment banking hurt their results in the third quarter. They failed to find much solace in the Slovakian vote.