Rising concerns that Greece may be unable to meet debt repayments have weakened most of the world's major stockmarkets.
Late last week, international rating agency Fitch downgraded Greece's long-term credit rating further into junk status, down three notches from BB+ to B+ in yet another blow to the debt-ridden country.
A year ago, Greece received the largest Western bailout loan, of 110 billion ($NZ196 billion), from the European Union and International Monetary Fund; which is now demanding further reforms and belt-tightening to deal with Greece's mountainous debt problem.
Craigs Investment Partners broker Chris Timms said United States' stock markets had undergone three consecutive weeks of losses, sparked by investor concern over the direction of global growth and more signs of weakness in the US economy.
Mr Timms said European shares fell as investors reduced their exposure to riskier assets as the "euro zone debt crisis intensified"; following the Fitch credit rating downgrade.
Forsyth Barr broker Suzanne Kinnaird said the US stock decline for a third straight week was the longest slump since August.
Investors were growing more concerned Greece would default on its debt, and reduced earnings forecasts had undermined confidence in the economy, she said.
Alongside a decline in the UK's FTSE 100 index last Friday, European stocks also declined, led by banks following the Fitch downgrade and Fitch's warning that even a voluntary restructuring of the country's debt amounted to a default, Ms Kinnaird said.
Fitch said its credit downgrading "reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform programme necessary to secure solvency of the state and the foundations for sustained economic recovery".
Greek Prime Minister George Papandreou will discuss new measures with his Cabinet to cut the budget deficit, in an effort to convince lenders that Greece can deal with a debt crisis without a restructuring.
At stake is a 12 billion aid tranche under the combined European Union and International Monetary Fund bail-out agreed last year, as well as additional help needed as the country is not expected to return to bond markets in 2012.
Mr Papandreou vowed to speed up reforms and do everything it takes to avoid default, setting the stage for the announcement of a tough set of measures.
"Greece must convince everyone, beyond any doubt, of its determination," he said in an interview in Sunday newspaper To Ethnos.
- Additional reporting AP, Reuters, Guardian News and Media
