UPDATE 1-Fitch downgrades 4 Portugal banks on funding risks

* Millennium bcp, BES fall two notches to BBB-plus

* BPI cut to A-minus from A, Banif nears junk status (Adds details from Fitch statement, byline)

NEW YORK, Nov 8 (Reuters) - Fitch on Monday cut the credit rating of four Portuguese banks due to increased funding and liquidity risks, as well as a deterioration in domestic performance and asset quality.

Fitch downgraded the ratings of Millennium bcp BCP.LS, Banco Espirito Santo BES.LS, BPI BBPI.LS, and Banif BNF.LS.

It said those institutions rely heavily on short- and medium-term wholesale funding sources, as well as on funding from the European Central Bank, as they find it difficult to access capital markets.

Although the banks had been able to reduce somewhat their reliance on ECB funding since August, “levels remain well above pre-financial crisis levels, highlighting continued funding and liquidity constraints,” Fitch said in a statement.

“This, together with considerable refinancing needs from debt maturities in 2011 and 2012, have added pressure to the banks’ liquidity and funding position,” the rating agency added.

Millennium bcp, Portugal’s largest-listed bank, as well as BES, had their ratings cut by two notches -- to BBB-plus from A.

BPI fell one notch in the rating scale, to A-minus from A, while Banif is now on the cusp of junk status after being downgraded by one level to BBB-minus from BBB.

All new ratings have a negative outlook, which means Fitch may downgrade them again in the next 12 to 18 months.

Portugal’s stock market was closed when news of the downgrade hit the wires. (Editing by James Dalgleish)