Shares in British banks were down on the FTSE 100 in morning trading after yet another of the eurozone "PIIGS" received a downgrade from ratings agency Moody's.

Last week both Greece and Spain had their credit ratings cut by Moody's, today however it was the turn of Portugal, which was downgraded from A1 to A3.

Moody's said that while Portugal had made progress in labour market reform, it is still too reliant on borrowing and has few signs of meaningful economic growth.

Portugal is expected by many to be the next on the list of PIIGS to receive a bailout from the European Union, following the forced bailouts of Greece and Ireland last year.

By 09:50 shares in Lloyds Banking Group were down 0.88 per cent to 59.85 pence per share, RBS shares declined 0.70 per cent to 41.11 pence per share, Barclays shares dropped 2.00 per cent to 286.15 pence per share and HSBC shares fell 2.83 per cent to 627.70 pence per share.

Overall the FTSE 100 was down 0.56 per cent to 5,720.92.