Fitch said it would cut Greece's rating even further if a credible rescue plan does not materialise The Greek government has said it will begin to sell stakes in a number of domestic corporations "immediately" in order to raise cash to help reduce its massive debts. These include stakes in the telecoms firm OTE, state-owned Postbank and the ports of Athens and Thessaloniki.Earlier, European stock markets fell, partly due to continuing fears about a possible debt restructuring in Greece.
Weak eurozone economic data also hit investor sentiment.
"The cabinet decided to proceed immediately with the sale of stakes in OTE, the Postbank, the Athens and Thessaloniki ports and the Thessaloniki water company in order to front-load its ambitious privatisation programme," said Greek Finance Minister George Papaconstantinou.
"To accelerate the process, the creation of a sovereign wealth fund composed of privatisation and real-estate assets was also decided."
He added that the government was "determined to continue and accelerate" plans to cut the country's debt.
Business confidence Jean-Claude Juncker Luxembourg Prime Minister and head of the eurogroup
The price of oil also fell, with US light crude down by $2 a barrel to $97.45 and London Brent slipping $2.60 a barrel to $109.80.
Borrowing costs for heavily indebted governments also rose further, with Italy and Spain suffering.
Sentiment was not helped by the latest purchasing managers index (PMI) for the eurozone - a survey of business expansion plans - which indicated that growth in France and Germany slowed significantly this month.
"The eurozone PMI continued to show robust expansion, but the rate of increase showed the sharpest slowing since just after the collapse of Lehman's in late-2008," said Chris Williamson, chief economist at Markit, the research firm that produces the index.
He pointed to a concurrent fall in service-sector business confidence to its weakest since July 2009 as a sign that the slowdown may prove more than a temporary blip.
Any such economic slowdown will intensify market concerns about whether some eurozone governments - chief among them Greece - will ever be able to pay off their debts.
'Enormous problem'
Meanwhile, in an interview for German weekly der Spiegel, the Luxembourg Prime Minister and head of the eurogroup, Jean-Claude Juncker, reiterated his idea that Greece could be granted a "soft restructuring" or debt "reprofiling", but only if its government met demanding policy targets.
Mr Juncker explained that the restructuring would involve a delay in repayments and a cut in interest payments, to be agreed with the country's lenders.
However, he said it would need to be done in a way that would not be deemed a default by the international rating agencies, which would cause an "enormous problem" for Europe's banks, who would then have to recognise billions of losses on their balance sheets.Mr Juncker also confirmed that any restructuring - and any additional rescue loans - would only be forthcoming if Greece stepped up privatisations and painful austerity measures.
The Greek cabinet met on Monday to discuss a doubling of budget cuts this year to 6bn euros, including public pay cuts, civil-service redundancies and an increase in value-added tax.
The government also intends to meet opposition leaders later in the week to hammer out a four-year cross-party austerity plan demanded by Brussels.
Meanwhile, Greece's cost of borrowing in bond markets has continued to rise steadily, as expectations of an eventual default rise.
The yield on its 10-year bonds rose another half a percentage point to 16.8% on Monday, up from 15.3% a week ago.
Hidden debts However, other countries also saw their borrowing costs rise, as markets remain concerned that a Greek default could trigger a broader meltdown. Last Updated at 23 May 2011, 22:20 GMT *Chart shows local time
Spain's 10-year borrowing cost increased to 5.6% in early trading, its highest level since January, but later relented to 5.5%.
The Spanish minority Socialist government suffered its worst defeat on record at local elections held over the weekend.Analysts say that with control of some heavily indebted regional governments changing hands, there are fears that hidden financial problems may be unearthed by the incoming administrations.
The result follows a week of protests by tens of thousands of mostly young people, expressing their anger over austerity measures and the country's high unemployment rate, including a youth unemployment rate of 45%.
Meanwhile, rating agency Standard & Poor's lowered its outlook on Italy's debts to negative, indicating future downgrades are more likely. Rival agency Fitch also put Belgium's debt on a negative outlook.
Italy's government is said to be planning to bring forward 35bn-40bn euros (£30bn-£35bn; $49bn-$56bn) of austerity measures to this June in response.
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