Merkel: Europe faces 'long road' to win back trust

German Chancellor Angela Merkel says Standard& Poor's downgrades of nine eurozone countries underline the fact that Europe has a "long road" in front of it to winback investors' confidence.

Merkel pushed on Saturday for European countries toimplement "as soon as possible" a planned pact to strengthen budgetdiscipline and said eurozone countries also must move quickly to implementtheir permanent rescue fund - the so-called European Stability Mechanism.

Germanywasn't downgraded by S&P, but France, with which it hasco-piloted the rescue effort, lost its top-notch AAA rating.

Merkel said the decision "won't torpedo" the workof the current, temporary eurozone rescue fund, the European FinancialStability Facility.

Separately, France'sprime minister said on Saturday his country will push ahead with cost-cuttingmeasures after its top-tier debt rating was downgraded, a blow withrepercussions across financially beleaguered Europe.

Other European countries from Austriato Cyprusassailed ratings agency Standard & Poor's after a raft of downgrades Fridaynight. The move may make it more expensive for struggling countries to borrowmoney, reduce debts and avoid a new recession.

French Prime Minister Francois Fillon struck a somber,measured tone when responding on Saturday to the downgrade, which wasparticularly wounding to France'sself-image and could hurt bailout efforts for struggling eurozone countries. France is central to those efforts, and thedowngrade, by pushing up its own borrowing costs, could make it harder for France to helpothers.

Fillon said the downgrade confirmed his conservativegovernment's plans for more reforms to bring down debts, despite worries thatmore austerity measures could suffocate growth.

The downgrade, coming three months before France holdspresidential elections, was "an alert that should not be dramatized anymore than it should be under-estimated," he said. He insisted that France is areliable investment.

Standard & Poor's stripped France of its coveted AAA status,knocking it down one notch to AA+. It dropped Italy even lower. Germany retained its top-notch rating, but Portugal's debtwas consigned to junk.

Cyprus'finance minister called Standard & Poor's two-notch downgrade of hiseurozone country to junk status "arbitrary and unfounded."

Kikis Kazamias said on Saturday that the agency ignored theisland's deficit-cutting measures as well as the discovery of significantoffshore natural gas deposits. He said the action illustrates once more howcredit ratings agencies exacerbate Europe'sdebt crisis.

Austria'schancellor criticized S&P's decision to strip his country of the top AAArating, and noted that his coalition government is working on an austeritypackage.

Werner Faymann wrote on his Facebook page that "Austria'seconomic data remain very good." He added that the decision showed"that Austriamust become more independent from the financial markets."

France'sdowngrade to AA+ lowers it to the level of U.S. long-term debt, which S&Pdowngraded last summer. S&P had warned 15 European nations in December thatthey were at risk for a downgrade.