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Spain rattles markets amid fears more regions need help | Spain rattles markets amid fears more regions need help |
(40 minutes later) | |
Markets have fallen on fears Spain's indebted regional governments will push the country into seeking a full national bailout. | |
On Friday, Valencia, one of the country's 17 regions, asked the central government for a financial lifeline. | |
On Sunday, a local newspaper in Murcia quoted its government's head as saying it would ask for funding help of up to 300m euros ($363m; £233m). | |
The yield on Spain's 10-year bonds jumped to 7.55%. | |
On Friday, the bond yield - which implies the interest rate the government would have to pay to borrow new money, and acts as a measure of investor confidence in Spain's creditworthiness - had been 7.28%. | |
Spain has already asked for and been granted a 100bn euros bailout for its banks, so far avoiding asking for the same sort of help as did Greece, the Republic of Ireland and Portugal. | |
Germany's 10-year borrowing costs have fallen to 1.13%, reflecting investors' trust in the country, leaving a record difference between the yield on German and Spanish bonds. | Germany's 10-year borrowing costs have fallen to 1.13%, reflecting investors' trust in the country, leaving a record difference between the yield on German and Spanish bonds. |
Yen strength | Yen strength |
Stock markets fell across Europe on Monday morning, averaging losses of 1.5%, while Spain's main market was down 3%. | Stock markets fell across Europe on Monday morning, averaging losses of 1.5%, while Spain's main market was down 3%. |
Spanish bank shares were down heavily again, with losses of 4%. Bankia was again the worst-hit and was down by 8%, matching Friday's loss. | Spanish bank shares were down heavily again, with losses of 4%. Bankia was again the worst-hit and was down by 8%, matching Friday's loss. |
The price of oil has also fallen by 2%, a sign that markets think there will be waning demand for oil as a result of worsening economic prospects. | The price of oil has also fallen by 2%, a sign that markets think there will be waning demand for oil as a result of worsening economic prospects. |
In Asian trading overnight, the euro fell to an 11-year low against the Japanese yen - which has acted as a haven currency since the 2008 financial crisis - on worries over the situation in Spain. | In Asian trading overnight, the euro fell to an 11-year low against the Japanese yen - which has acted as a haven currency since the 2008 financial crisis - on worries over the situation in Spain. |
The euro fell to 94.37 yen, its lowest level since November 2000. | The euro fell to 94.37 yen, its lowest level since November 2000. |
"The fear now is that, given its debt woes, Spain may eventually need a bailout from the International Monetary Fund or the eurozone's rescue fund," Justin Harper of IG Markets told the BBC. | "The fear now is that, given its debt woes, Spain may eventually need a bailout from the International Monetary Fund or the eurozone's rescue fund," Justin Harper of IG Markets told the BBC. |
"That is driving investors away from the euro to other relatively safer-haven assets." | "That is driving investors away from the euro to other relatively safer-haven assets." |
Asia worries | Asia worries |
Worries that the debt problems in eurozone will hurt growth in Asia hit the regions' stock markets, with Japan's Nikkei 225 index down 1.9% and South Korea's Kospi 1.8% lower. | Worries that the debt problems in eurozone will hurt growth in Asia hit the regions' stock markets, with Japan's Nikkei 225 index down 1.9% and South Korea's Kospi 1.8% lower. |
The eurozone is a key market for Asian exports and there are concerns that demand from the region may decline in the near term. | The eurozone is a key market for Asian exports and there are concerns that demand from the region may decline in the near term. |
At the same time, a weaker euro has also added to the woes of Asian exporters, as it makes their goods more expensive for buyers from the region. | At the same time, a weaker euro has also added to the woes of Asian exporters, as it makes their goods more expensive for buyers from the region. |