The debt-stricken euro zone was back in the firing line yesterday after last week's EU summit deal afforded only a brief respite and leaders warned of a two-speed Europe.

Ratings agency Moody's was first to turn the screw. It declared the crisis talks had failed to produce "decisive policy measures" and threatened to review the credit ratings of all EU states within the next three months.

The first big test of market confidence came as Italy issued seven billion euros ($9.3 billion) in 12-month bonds to fund its debt, but will have to pay dangerously high 5.952 per cent interest.

Europe markets opened down as concerns returned, after Britain vetoed a new treaty to tame the crisis.

European leaders had hoped that Friday's agreement to move towards a fiscal pact, seeking to eradicate their public deficits under close EU supervision, would reassure markets nervous about their massive debts being repaid.

But yesterday they were also forced to admit that Britain's decision to stay out of the deal meant there was now a split, two-speed Europe.

French President Nicolas Sarkozy said he and German Chancellor Angela Merkel had "tried everything" to convince British Prime Minister David Cameron to sign the pact.

"But there are now clearly two Europes," Sarkozy told Le Monde. "One wants more solidarity between its members and more regulation. The other is attached only to the logic of the single market."

EU Economic Affairs Commissioner Olli Rehn was more critical, warning London its veto would not protect the City of London from new financial regulation - the main reason cited for the veto decision.

Greece's new leadership was in tense talks with its global creditors and private bondholders over details of a new euro zone bailout to enable the country to ease its debt burden.