Chinese rating agency Dagong said Thursday it had cut its sovereign credit rating for France as the deepening eurozone debt crisis hurts economic growth and threatens Paris's solvency.

The cut to Europe's second biggest economy came as the region's leaders prepare for a summit in Brussels that many hope will see them agree on a plan to save the euro from collapse.

Dagong, which has little influence outside China, cut France's local and foreign currency sovereign credit rating to "A+" from "AA-" with a negative outlook, adding that a further downgrade was possible.

"We believe that the economic slowdown is worse than expected and the economy will remain sluggish over the medium term," Dagong said in a statement.

External risks to France's financial system and the rising cost of financing for the government and institutions "undermine the solvency of the French government", it added.

It is the second European country in as many days to see its credit rating reduced by the controversial Chinese firm.

Dagong on Wednesday cut Italy's rating from "A-" to "BBB" with a negative outlook due to the country's growing reliance on the European Central Bank to buy its bonds and its declining ability to repay debt.

Standard & Poor's this week placed 15 eurozone countries, including Italy, on negative credit watch -- a warning of a possible imminent cut in their sovereign credit ratings, which could increase their borrowing costs.

Despite its lack of sway in international markets, Dagong has made headlines by accusing mainstream agencies Moody's, Fitch and Standard & Poor's of causing the 2008 financial crisis by not properly disclosing risk.

Chairman Guan Jianzhong, a paid adviser to China's government, insists his agency is fully independent -- and stands by his tough talk about his rivals, whose ratings affect interest rates at which states and companies can borrow.

China expected to grow 8.9% in 2012: report
Beijing (AFP) Dec 8, 2011 - China will further relax credit restrictions next year as the world's second largest economy slows and exports decline due to woes in Europe and the United States, a state-run think tank said Thursday.

Gross domestic product is expected to expand 8.9 percent next year, according to forecasts by the Chinese Academy of Social Sciences (CASS) published in the China Daily newspaper.

That compares with an expected growth rate of 9.2 percent this year and follows the blistering 10.3 percent recorded in 2010, CASS said.

CASS deputy head Li Yang said he expected Beijing to announce more credit relaxation next year to counter the domestic slowdown and crises in key export markets.

"Monetary policy may be slightly loosened in the first half of next year, and the reserve requirement ratio for commercial banks will be further reduced," Li was quoted saying.

China last week cut the amount of money banks must keep in reserve for the first time in three years as it seeks to boost lending and spur activity to counter alarming signs of a domestic slowdown and the US and eurozone troubles.

Leading Chinese officials have painted a gloomy picture for the country's exports, warning that the eurozone debt crisis and sluggish recovery in the United States threatened the Asian economy.

CASS said China's exports would likely grow 17.3 percent next year compared with a forecast increase of 20.4 percent in 2011 as European and American consumers cut back on spending.

The country's consumer price index, a key gauge of inflation, is expected to slow to 4.6 percent next year from a forecast 5.5 percent this year, after punching above six percent this year due to soaring food and housing costs.

Growth in fixed-asset investment -- a key measure of government spending on infrastructure -- is expected to slow to 22.8 percent in 2012 from 24.5 percent this year, CASS added.