Moody's international rating agency has extended its review for possible downgrade of Italy's Aa2 local and foreign currency government bond ratings, it said in a statement on Saturday.

"In light of the increasingly challenging economic and financial environment and fluid political developments in the euro area, Moody's is continuing to evaluate Italy's local and foreign currency bond ratings in the context of the risks identified," the statement said.

"Moody's will strive to conclude the review within the next month."

Initially, the agency placed Italy's ratings on review for possible downgrade on 17 June 2011 due to macroeconomic structural weaknesses and a likely rise in interest rates, risks surrounding the fiscal consolidation plans, and the risks of changing funding conditions for European sovereigns with high levels of debt.