US credit rating agency Standard & Poor's has cut its growth forecast for the Eurozone and now expects the region's economy to contract by -0.8 percent in 2012 compared to the prior forecast of -0.7 per cent.

It has also cut back its forecast for 2013, expecting no growth (0.0%) compared to its prior 0.3% growth forecast.

Most notably, S&P cut its forecast for Spain. It now expects the country's economy to contract by -1.4% in 2013 compared to the -0.6% that was anticipated in July.

"Recent economic indicators continue to paint a bleak picture for Europe. The data are confirming our view that the region is entering a new period of recession, after three quarters of negative or flat growth since the final quarter of 2010. But prospects continue to vary from country to country," said S&P economist Jean-Michel Six.

"In particular, we forecast another year of very weak growth in 2013 in France and the UK, and further declines in output in Italy and Spain."

SC

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