Ireland's long-term credit rating was downgraded by two notches on Friday, after concerns the recapitalisation of banks associated with recent stress tests would weaken the government's financial position.

Moody's, a rating agency, cut Ireland's long-term government bond rating from Baa1 to Baa3, and placed the economy on a negative outlook. The downgrade places Ireland's credit rating one notch above junk status. The rating agency said the expected decline in the Irish government's financial