Arab Today, arab today spain doubts send european markets tumbling
Last Updated : GMT 14:03:04
Arab Today, arab today
Arab Today, arab today

Spain doubts send European markets tumbling

Arab Today, arab today

Arab Today, arab today Spain doubts send European markets tumbling

London - AFP

Struggling Spain pushed European stocks and the euro sharply lower Friday as investors looked past a eurozone bank rescue deal for Madrid to focus on the country\'s deteriorating outlook. Dealers said the bank bailout was largely as expected but the markets were spooked after Madrid warned that it did not expect the economy to return to growth until 2014 and regional finances came under increased strain. The economy will shrink 1.5 percent this year, instead of 1.7 percent, and then contract another 0.5 percent in 2013 instead of growing 0.2 percent, the Spanish budget minister said. The forecasts hit sentiment badly and the damage was compounded by news that the Valencia region was asking the central government for financial aid, heaping the pressure on Madrid which has imposed sweeping austerity measures in a hugely unpopular drive to stabilise the public finances. Spanish stocks plunged more than 5.0 percent at one stage while Madrid\'s long-term borrowing costs soared into the 7.0 percent danger zone on fears the government will have to find more money to save the regions from going broke. Mass protests against the government\'s draconian austerity measures overnight added to the negative tone towards Spain and Italy. \"Spain is once again grabbing the headlines,\" said RIA Capital Markets analyst Nick Stamenkovic, citing mounting concern about the state of regional government finances. \"Ten-year Spanish yields (are) heading to an all-time high as investors fret Spain will need sovereign bailout soon ... the euro is under pressure amid the grim economic outlook,\" Stamenkovic said. In mid-afternoon trade, Madrid was down 4.68 percent while Milan plunged 4.19 percent as the contagion effect built up after a quiet morning. The yield, the rate of return earned by investors holding the benchmark Spanish 10-year bond was 7.2690 percent, up from 6.969 percent Thursday, with the Italian 10-year bond at 6.1760 percent. Any rate above 6.0 percent for long-term borrowing is widely considered to be unsustainable for more than a short period while 7.0 percent is the level at which Greece, Ireland and Portugal were forced to seek debt bailouts. London\'s FTSE 100 benchmark index of leading shares meanwhile dropped 0.97 percent, Frankfurt\'s DAX 30 index lost 1.46 percent and in Paris the CAC 40 was down 1.63 percent. In foreign exchange deals, the European single currency fell sharply to $1.2161 from $1.2276 in New York late Thursday. \"Protests in Spain over austerity measures and (concern over the bank bailout plans) have pushed the country\'s 10-year bond yields back above the unsustainable seven percent mark,\" said ETX Capital analyst Ishaq Siddiqi. \"Fears are growing that austerity measures will not be able to alleviate pressure on Spain\'s borrowing costs, will eat away at economic growth and cause long-term hardship for the beleaguered nation,\" he said. Earlier on Friday, Asian stock markets mostly closed lower as profit-taking after the previous day\'s rallies overshadowed another strong performance on Wall Street. Tokyo fell 1.43 percent, Hong Kong gained 0.42 percent, Shanghai lost 0.74 percent and Sydney was 0.18 percent lower.

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Arab Today, arab today spain doubts send european markets tumbling Arab Today, arab today spain doubts send european markets tumbling

 



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