S&P on Friday cut the ratings of Italy, Spain, Portugal and Cyprus by two notches and the standings of France, Austria, Malta, Slovakia and Slovenia by one notch each. That put highly indebted Italy on the same BBB+ level as Kazakhstan.

Asked in an interview broadcast by Austrian radio on Saturday if Italy was "problem child number one," he said:

"In a certain sense, yes, because we know this year Italy has a very significant refinancing need. Italian banks also need refinancing.

"In normal times this is all possible, in very nervous and difficult times it can be a problem and in my view this sharp downgrade of Italy is probably one of the most difficult and problematic aspects of this sweeping blow from the ratings agency."

Nowotny, who is governor of Austria's central bank, said he did not think Austria's losing its top rating from S&P would have any serious immediate consequences, noting markets normally look to see whether at least two agencies downgrade a country.

But he added: "It cannot be ruled out that there is a deterioration in Europe overall and this could probably affect Austria."

(Reporting by Michael Shields; Editing by Matthew Jones)