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Nokia's President and CEO Stephen Elop gestures as he speaks during a news conference for the launch of the new Nokia Lumia products in Beijing, March 28, 2012.

ZHEYANG SOOHOO/REUTERS

Moody's dealt a fresh ratings blow to Nokia on Monday, keeping the shares below a level not seen in 15 years and reflecting the Finnish handset maker's struggle to compete with Apple Inc. and Samsung.

Moody's cut Nokia's long-term credit rating to Baa3, one level above speculative grade, sending the shares down 3.5 per cent to 2.95 euros ($3.85).

The shares had been on a declining trend since a profit warning last Wednesday, and they broke through the psychological barrier of 3 euros earlier on Monday for the first time since 1997.

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Nokia said last week that it would post losses for the first and second quarters, and after Standard & Poor's announced a similar downgrade in March.

"Moody's believes that the structural challenges facing Nokia's mobile phones segment may not be easy to address, such as the market share gains recorded by makers of very low-end phones or new phone promotions by Chinese carriers," the U.S. ratings agency said.

Nokia quickly defended its financial position, saying it had gross cash balances of $12.7-billion and a net cash position of $6.39-billion as of March 31.

The once-dominant mobile phone maker lost the top spot in the lucrative smartphone market last year to Apple and phones running Google's Android system. It also faces tough competition from nimble Asian competitors at the low-end.

The stock had already crashed more than 50 per cent since Nokia announced in February 2011 that it was dropping its own Symbian operating software and switching to the largely untried Windows Phone system developed by Microsoft .

Sales of Symbian phones have been falling faster than originally expected, and sales of new Windows phones have yet to make up for those losses.

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