Following the collapse of Greek debt talks on Friday, European institutions and the IMF arrive in Athens today to find out if the government is committed to its austerity programme.

The downgrades, officially released after the US markets closed, capped another chaotic day for the eurozone, which was already reeling from the collapse of Greek debt restructuring talks.

Raoul Ruparel of Open Europe said the Greek debt talks are a bigger threat than ratings cuts.

Combined with news that Greek debt talks have stalled, making disorderly Greek default more likely, the French downgrade has added to the impression that the euro crisis is entering a new, and possibly even more dangerous phase.

Prime Minister David Cameron will hold talks on the eurozone debt crisis with embattled Italian PM Mario Monti as crucial Greek debt talks resume and World Bank warns of risk of global slump if Europe's problems escalate.

Sentiment was also dented by news that Greek debt restructuring talks had failed to produce agreement and would be halted until next week.

A decline in production sent Tullow Oil shares down as the FTSE 100 hit resistance at the 5,700 level ahead of Greek debt talks.

In a sense, this is the calm after the storm; both the S&P downgrade and the failure of Greek debt talks were not exactly unanticipated, so markets have remained fairly sanguine as the new week gets underway.

But an unexplained delay in the announcement of the Italian results, he said, as well as the continuing uncertainty over the Greek debt restructuring talks, "took the shine off things."

European debt crisis live: Critical Greek debt deal talks continue 2.