Fitch lowers Spain credit rating as ECB warns of worsening conditions in Europe

International ratings agency Fitch downgraded Spain's credit rating on Friday, a day after the country launched an austerity drive, which, analysts say demonstrates the difficulty of steering out of the debt crisis with budget cuts that hamper growth.

The widely expected downgrade comes after warning from European Central Bank policymakers that Europe's troubles would spread to other regions. Meanwhile, labor unions have threatened strikes.

The Spanish parliament has approved a $15 billion euro spending cut on Thursday following similar measures by Greece, Portugal and Italy.

The euro is down nearly 8 per cent versus the US dollar in May, while gold hit a record high earlier this month.

Labor unions have been angered by the downgrade even as Fitch citied "a lower level of private sector and external indebtedness" in lowering the country's rating to AA+ from AAA.

Standard & Poor downgraded the country last month and rated its outlook negative while Fitch rated it stable.