Spain’s credit rating was cut for the third time in three years by Standard & Poor’s as slowing growth and rising defaults threaten banks and undermine efforts to contain Europe’s sovereign-debt crisis.

The ranking was reduced by one level to AA-, S&P’s fourth- highest investment grade, with the outlook remaining negative, the rating company issued in a statement late yesterday. Fitch Ratings downgraded Spain to the same level on Oct. 7, when the company also cut its rating on Italy.

Spain economy : Woeful and weak

The ratings agency added that the country’s high unemployment would remain a drag on the Spanish economy. Last week, the Fitch agency also cut Spain’s rating, a process that can raise a country’s borrowing costs. S&P’s move comes as G20 finance ministers are due to meet on Friday to discuss the eurozone crisis.

On Thursday, Fitch downgraded the creditworthiness of UK banks Lloyds and Royal Bank of Scotland (RBS), and also Switzerland’s UBS. The downgrade move comes as activists opposed to the Spanish government’s continuing austerity measures, the so-called “indignants”, are due to hold a protest march in Madrid on Saturday.

Turkey : Spain should see Turkey as springboard

Meanwhile Turkey’s economy minister said on Thursday that Spain should see Turkey as a springboard, and vice-versa due to their geographies. Turkey is the second country in world in contracting industry, and Turkey would like to share advantages it has gained in this industry in Africa, Middle East and Caucasus with Spanish businessmen,” Caglayan told Spain-Turkey Investment & Cooperation Summit in Madrid, Spain.

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