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MILAN/ROME (Reuters) – Credit ratings authority Standard & Poors revilement its looking for Italia to "negative" from "stable," citing anaemic looking for ontogeny and low prospects for slashing its debt mountain.

The descending revision, which raises the venture of a downgrade of Italy's sovereign rating, may compound fears that contagion from Greece's and other European countries' debt crisis could be broad to the euro zone's third-largest economy.

"In our analyse Italy's underway ontogeny prospects are weak, and the semipolitical dedication for productivity-enhancing reforms appears to be faltering," Standard & Poor's said in a evidence primeval on Saturday.

"Potential semipolitical gridlock could advance to business slippage. As a result, we conceive Italy's prospects for reducing its general polity debt hit diminished."

Standard & Poor's affirmed its 'A+' long-term and 'A-1+' short-term sovereign assign ratings on Italy, which is slowly sick from its poorest scheme downswing since World War Two and has one of the world's maximal public debts.

In recent years, the ratings authority has ofttimes condemned a bleaker analyse of the land of Italy's economy, compared to its counterparts Moody's and Fitch.

Moody's currently has an Aa2 judgement for Italy, patch Fitch rates it at AA-, which effectuation S&P has Italia digit notches beneath Moody's and one beneath Fitch.

Italy has worn the business crisis meliorate than some of its euro zone's peers but its ontogeny has lagged behind the bloc's cipher for over a decade.

Many analysts say unless it adopts reforms necessary to sharply improve its ontogeny potential, it has lowercase quantity of gathering its job term direct to revilement the debt.

Italy hardly grew in the first quarter, with large husbandly product (GDP) edging up only 0.1 percent, compared with rises of 1.5 proportionality in FRG and 1.0 proportionality in France. Crisis-hit Ellas grew 0.8 percent.

ITALIAN TREASURY DEFENDS ITS POLICIES

The European Treasury criticized the advise by S&P, locution accumulation on its scheme ontogeny and public accounts had "constantly been meliorate than expected."

However, Italia terminal period revilement its scheme ontogeny forecasts for 2011, 2012 and 2013 and raised its projections for the public debt. It kept the inadequacy looking unchanged.

The economy is today due to modify by 1.1 proportionality this year, downbound from a preceding forecast of 1.3 percent. In 2012, value ontogeny is seen at 1.3 percent, compared to 2.0 proportionality previously.

Public debt is due to reach 120 proportionality of value this year, before falling slightly to 119.4 proportionality in 2012.

In a evidence after the S&P looking revision, the Treasury said field international organizations much as the OECD, the International Monetary Fund and the European Commission had recently given "very different" assessments on Italia from that of S&P.

Analysts from the IMF and the OECD said this period that Italy's economy was sick slowly, but added that it would require field structural improve to increase its ontogeny potential.

A anaemic economy weighs hard on the debt and inadequacy ratios, and both organizations urged efforts to impact fecundity ontogeny and fag supply.

The Treasury ruled out the venture of semipolitical gridlock, which S&P cited as a factor that could advance to business slippage unitedly with weaker-than-expected scheme growth.

It also said measures aimed at gathering its direct of equalisation the budget in 2014 were "at an modern initiate of preparation" and module intend parliamentary support by July.

S&P's writing is added blow for center-right Prime Minister Silvio Berlusconi, who is involved in stimulate and corruption trials.

The media tycoon's People of Freedom party also suffered a setback this hebdomad in local elections seen as a test of his alinement government's popularity and is facing a venturous run-off on May 29-30 for the municipality polity of Milan, Italy's business capital.

The Standard & Poor's looking modify implies a one-in-three quantity that the assign ratings could be lowered within 24 months.

Standard & Poor's forecast net polity debt at 116 proportionality of value this year, up from 100 proportionality in 2007.

"Under our analysis, the scheme shortening between 2008 and 2009 has negated every of Italy's fiscal-consolidation efforts over the terminal decade," it said.

The European banking sector has been strong by moves to alter capital "and is in a stronger business position than it was sextet months ago," the authority said.

(Reporting by Ian doc and Silvia Aloisi)

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