LONDON - The eurozone's sovereign debt crisis took a turn for the worse Monday as Cyprus said it would seek aid from the eurozone's bailout funds.
Earlier in the day, the ratings agency Fitch downgraded the island nation's government debt to junk status. Cyprus last year received a three-year, 2.5 billion euro loan from Russia.
Greece, Portugal and Ireland have already received bailouts.
In addition, the new Greek finance minister, Vassilis Rapanos, tendered his resignation on Monday. Rapanos was hospitalized Friday after being treated for intense abdominal pain, nausea, sweating and dizziness.
Greece's new prime minister, Antonis Samaras, will also miss a crucial summit meeting of European Union leaders scheduled for Thursday and Friday in Brussels.
Samaras left the hospital Monday and is recovering from eye surgery. Greece will be represented by a ministerial delegation at the summit meeting, where EU officials are expected to debate relaxing the terms of Greece's bailout.
Even before Cyprus made its request for a bailout, stock markets plunged in Europe and the euro dropped amid doubts that EU leaders will achieve the far-reaching breakthrough needed to resolve the debt crisis.
"This will be a decisive week for Europe," the German foreign minister, Guido Westerwelle, said Monday at a meeting of EU foreign ministers in Luxembourg.
On Monday, Spain made a formal request for up to $124 billion in aid for its banks, but how the money is to be disbursed is still the subject of negotiation. The Spanish government wants the aid to go directly from European bailout funds to the banks. Eurozone rules now require that the aid be funneled through the government in Madrid, which would add to Spain's sovereign debt.
Moody's Investor Service late Monday downgraded its credit ratings on 28 Spanish banks. Moody's said the weakening condition of the country's finances is making it more difficult for the government to support the country's lenders. The rating agency also said the banks are vulnerable to losses from Spain's busted real estate bubble.