RTRS:Moody's keeps Austria AAA, eyes euro zone crisis
* Maintains top rating with stable outlook
* Says outlook hinges on resolving euro zone crisis
Dec 23 (Reuters) - Ratings agency Moody's maintained Austria's top sovereign debt rating with a stable outlook on Friday but said the euro zone debt crisis still loomed as a potential danger.
"Austria's AAA ratings currently carry a stable outlook but this increasingly becomes dependent on a resolution of the wider euro zone crisis which has begun to negatively affect core euro area member states like Austria," it said in a statement.
"The longer the sovereign and bank funding markets remain volatile, the more likely it is that further credit pressures will develop for most euro area countries, including Aaa-rated countries."
Standard & Poor's has also warned that the sovereign debt crisis could prompt it to downgrade the ratings of 15 euro zone members, including Austria.
In its report on Friday, Moody's said a substantial and prolonged deterioration of Austria's ability to handle its debt would weigh on the top rating.
"A scenario with a series of sovereign defaults and exits from the euro zone would also put pressure on Austria's rating, as it would for other euro zone Aaa-rated sovereigns," it said.
In keeping Austria's top rating, it cited the country's economic strength, skilled labour force, competitive export sector and low unemployment.
It said it "views positively the recent announcement by the government to introduce a balanced budget requirement into the constitution as well as attempts to limit the sovereign's exposure to the banking system's foreign operations."
But it also highlighted the risk posed by Austria's relatively large banking sector, which includes the biggest lenders in central and eastern Europe (CEE).
"Moody's notes positively that the authorities are taking steps to limit the sovereign's contingent liabilities that may arise in particular from the banks' large exposure to the CEE region...However, these developments will take time to bear fruit," it said.
The Moody's report said the impact on public finances from the debt of government-related entities had to be monitored closely.
