Spanish stocks dropped sharply early Friday morning after ratings agency Moody's downgraded its credit score of 16 Spanish banks in the latest blow to the troubled financial sector.

The Ibex 35 index was off more than 2 points shortly after trading began Friday. Banks were among the biggest losers.

Moody's acted late Thursday, citing banks' load of non-performing loans amid a recession-plagued economy, their creditworthiness and the government's sovereign debt problems, among other woes.

Those punished included Banco Santander, SA, the eurozone's largest bank by market capitalization.

Shares in Bankia SA, a recently nationalized bank, took a roller coaster ride Thursday, ending up sharply lower on reports depositors pulled out a (EURO)1 billion in a week.

On the bond market the interest rate on 10-year bonds was unchanged at 6.25 percent.