Shares of U.S long-distance phone company WorldCom Inc. fell to 7-1/2 year lows Tuesday on market rumors that debt rating agencies were about to downgrade the company's debt, although Standard & Poor's denied it was about to take such an action.

"Investors are reacting to rumors that there may be potential debt downgrades," said George Rodriguez, head of trading at investment firm Guzman & Co.

Shares of WorldCom were off 17.3 percent, or $2.08, at $9.92, their lowest level in nearly seven and a half years.

S&P said the rumor it may downgrade WorldCom to junk status was "nonsense."

"The rumors are unsubstantiated," said Rosemarie Kalinowski, an S&P director who follows the No. 2 U.S. long-distance telephone company. "It's nonsense."

Negative news from other telecommunications companies also weighed on WorldCom's stock, analysts said. They cited Global Crossing Inc.'s bankruptcy filing, a reduced outlook from Qwest Communications International Inc. and disappointing earnings from fiber-optic network builder Level 3 Communications Inc., which also warned it could violate a debt covenant.

WorldCom's shares also felt pressure when energy trader Williams Cos. warned Tuesday its former telecoms subsidary, Williams Communications Group Inc., could cause it some problems.

"There was even a rumor that S&P might take them (WorldCom) out of the 500," Richard Klugman, an analyst with Jeffries & Company said. "That makes absolutely no sense, but nevetheless it's contributing to what's driving the stock down."

He also pointed to rumors that WorldCom's Chief Executive Bernie Ebbers might face a margin call if the company's stock falls below $10, which it did Tuesday.

A margin call is a demand for funds. It requires a customer, in this case Ebbers, to deposit money or securities to bring a margin account -- which lets that customer buy securities with borrowed money -- up to a certain minimum level.

A spokesperson for WorldCom said there was no way a company with its market capitalization and cash profile could be removed from the S&P 500.

"It's not a concern of ours," said spokesperson Brad Burns. "There's absolutely no precedent for a company with our profile to be removed from the S&P 500."

As to Ebbers getting a margin call?

"That's Bernie's personal finances, we can't speak to that," Burns said.

All three top U.S. credit rating agencies -- Moody's, S&P and Fitch Ratings -- have said this month they are evaluating their rating processes to help make their ratings more timely, though perhaps more volatile. This following heated criticism from market participants that they were too slow to downgrade now-bankrupt energy trader Enron Corp. .

Standard & Poor's rates WorldCom's senior unsecured debt "BBB-plus," three notches above "junk" status, with a stable outlook.

Moody's Investors Service said it rates the debt "A3," four notches above junk status, also with a stable outlook. That agency was not immediately available for comment.

Several commentators have noted that Moody's in particular has acted more aggressively in recent weeks in downgrading such companies as energy traders Calpine Corp. and Mirant Corp. and retailers Saks Inc. and Kmart Corp. . The latter has since filed for bankruptcy protection.

Meanwhile, shares in leading Brazilian long-distance phone operator Embratel, which is controlled by WorldCom, tanked in tandem. The stock -- which accounts for 4.5 percent of Brazil's benchmark Bovespa stock index -- dived 9.35 percent to 8.34 reais. The index was off 3.24 percent.