The Australian dollar has fallen to its lowest level in almost six months as fears of a worsening European debt crisis hit global stock markets.

At 1200 AEST on Friday the Australian dollar was trading at 98.47 US cents, its lowest level since November 2011, down one US cent from 99.47 US cents on Thursday.

Nomura rates strategist Martin Whetton said a news report suggesting deposit holders withdrew more than one billion euros from Spanish bank Bankia overnight drove stock markets and risk currencies like the Australian dollar lower.

Ratings agency Moody’s added to the negative sentiment after it downgraded the debt ratings of 16 Spanish banks early on Friday.

Meanwhile, another ratings agency, Fitch, downgraded the credit rating of Greece, which installed an interim government overnight ahead of fresh elections next month, to CCC overnight, warning of the “heightened risk” the country could be forced out of the euro zone.

The negative sentiment saw the ASX All Ordinaries fall by more than two per cent during the morning session, in line with big falls across Asian stock markets.

Mr Whetton said the negative sentiment had also pushed Australian bond futures yields to record lows, which had put further pressure on the Aussie.

“We’ve hit 60 year lows in bond yields and that reduces the attractiveness of the currency,” he said.

At 1200 AEST on Friday, the 10-year bond futures contract was trading at 96.920 (implying a yield of 3.080 per cent), a record high, up from 96.780 (implying a yield of 3.220 per cent), on Thursday.

The June three-year bond futures contract was at 97.560 (2.440 per cent), up from 97.380 (2.620 per cent).