Moody's warns that U.S. top rating in danger

A warning that the United States may lose its cherished triple-A credit rating and concerns over Europe's debt problems weighed on stock markets Thursday, though an indication that the Federal Reserve could provide more monetary stimulus limited losses.

Moody's warned late Wednesday that it may downgrade its view because of the failure of the White House and Congress to raise the $14.3 trillion borrowing limit and avoid a default.

"The review of the U.S. government's bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes," Moody's said. "As such, there is a small but rising risk of a short-lived default."

Though most analysts think the politicians will agree to raise the threshold by the early August deadline, the warning reminded investors that high debt is not just a European problem and knocked confidence in the markets.

"Further talks [between the White House and Congress] are scheduled today [Thursday] and investors will continue to watch the situation, which is likely to keep both the dollar and stock market somewhat sensitive," said Joshua Raymond, chief market strategist at City Index.

On Wednesday, Fed chairman Ben Bernanke said the U.S. central bank is prepared to provide additional stimulus if the current economic lull persists.

Dow futures were down only 0.1 percent at 12,416 while the broader Standard & Poor's 500 futures fell an equivalent rate to 1,312.

Earlier in Asia, Japan's Nikkei 225 stock average finished down 0.3 percent at 9,936.12, while Hong Kong's Hang Seng Index inched up 0.1 percent to 21,940.20. The Shanghai Composite Index climbed 0.5 percent to 2,810.40.