Moody's: don't see contagion from Europe spreading to Japan

TOKYO (Reuters) - Europe's sovereign debt crisis is unlikely to spread to Japan's government debt market due to its current account surplus and large holdings of assets overseas, Moody's Investors Service said on Wednesday.

Future ratings actions on Japan could be either on the upside or on the downside, Tom Byrne, Moody's senior vice president and regional credit officer, said in a press conference.

Earlier on Wednesday Moody's cut its rating on Japan's government debt by one notch to Aa3, blaming large budget deficits and a buildup of debt since the 2009 global recession.

Still the U.S. credit rating company said the outlook was now stable given the "undiminished home bias of Japanese investors and their preference for government bonds, which allows the government's fiscal deficits to be funded at the lowest nominal rates globally."

(Reporting by Stanley White; Editing by Joseph Radford)