Fitch on Tuesday cut its rating on Nokia to BB+ from BBB- and said this could be downgraded further unless the company's business showed improvements over the second half of 2012 and in 2013.

"Given the potential headwinds facing the company, Fitch is currently not convinced that Nokia can attain this over the course of 18 months," it said in a statement.

Nokia defended its financial position in a separate statement.

"Nokia will continue to increase its focus on lowering the company's cost structure, improving cash flow and maintaining a strong financial position," Chief Financial Officer Timo Ihamuotila said.

Last week Nokia reported a steep loss for the first quarter, dropped its sales chief and promised to slash more costs.

(Reporting by Tarmo Virki; editing by James Jukwey)

• A Permanent Economic Emergency