According to the media reports, Credit rating agency Standard & Poor's on Tuesday, downgraded Greek debt to junk status, spurring a sell-off in Europe and a run for cover in U. S. equity markets.

The New York Times has reported that S&P also downgraded Portuguese debt, but not close to the level of Greece, which lost its hold on its debt as investment grade.

"Sovereign credit worthiness" in Greece, "is no longer compatible with an investment-grade rating," S&P said.

The downgrade could put a serious wrinkle in a rescue effort assembled by European Union finance leaders and the International Monetary Fund to bail Greece out of a massive debt burden.

"The root causes" of Greece's debt problem needed to be addressed, suggesting more austerity measures were in order, Bank of Greece Vice President Lucas Papademos said.

The Times also said that with further austerity measures in public debate, workers in Greece and Portugal took part in street protests.

It would tap into the $60 billion loan program, Greece said last week. But Peter Boockvar, an equity strategist at Miller Tabak, told MarketWatch the downgrade, "if followed by Moody's," could create a situation in which Greek bonds "will no longer be (available) to use as collateral in borrowing from the European Central Bank." (With Inputs from Agencies)