MILAN (AP) -- Fitch Ratings Agency has downgraded Italy's credit rating to BBB+ from A- with a warning of a further downgrade, citing the uncertainty created by February's inconclusive elections.

Fitch on Friday said the failure to come up with a clear winner made "it unlikely that a stable new government can be formed in the next few weeks," thereby harming prospects of further reforms.

The rating agency said Italy's recession was one of the deepest in Europe, with an expected contraction of 1.8 percent in 2013. Fitch added that the size of the country's debt as a proportion of its economy is expected to peak at 130 percent this year, higher than an earlier estimate of 125 percent.

Talks on forming a new government aren't expected to begin before March 20.

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