Sovereign debt crisis more serious than originally thought

LONDON -- The Greek debt crisis escalated again Thursday as new data showed the government's gaping budget deficit was worse than previously thought and investors expressed fears that officials in Athens may not agree to stringent demands for an international bailout.

The developments put new pressure on the euro and other heavily indebted European nations including Spain, Portugal even Belgium.

Moody's rating agency, meanwhile, downgraded Greek debt for the second time in five months, saying it feared the financially troubled nation may be forced to continue paying high interest rates that could compound its economic woes.

Officials from the European Union and International Monetary Fund were in emergency bailout talks with the government in Athens, although it remained unclear if Greek officials would accede to demands for more austerity measures beyond the tax hikes and salary cuts for state workers imposed earlier this year.

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