Spain’s 10-year bond yield climbed to a euro-era record of 7 per cent on Wednesday as the storm surrounding Europe’s debt crisis worsened, with fears over its impact on global growth sending world shares lower, according to CNBC News. U.S. stock index futures pointed to a more mixed start on Wall Street after weak retail sales data and the euro zone’s problems had sent shares lower on Wednesday. The rise in Spanish debt yields came as Germany, Europe’s most powerful economy, rebuffed calls from other European leaders to help underwrite the region’s debt or guarantee deposits in euro zone banks. Chancellor Angela Merkel, addressing parliament in Berlin, labelled ideas such as issuing joint euro bonds or creating a Europe-wide bank deposit guarantee scheme as “miracle solutions”, and said they were “counterproductive” and would violate the German constitution. “It is our task today to make up for what was not done (when the euro was created in 1999) and to end the vicious circle of ever new debt, of not sticking to the rules,” Merkel said. The apparent tensions at the heart of the euro area over how to deal with the crisis did little to shake the single currency out of its trading range however, with many investors sidelined by the approach of Sunday’s cliffhanger election in Greece, which could see it leave the 17-member currency bloc. The euro has spent the week within a range between a near two-year low set on June 1 of USD 1.2288 and Monday’s three-week high of USD 1.2672 and was up 0.1 per cent on Thursday at USD 1.2575. The rise followed a three-notch downgrade in Spain’s credit rating by Moody’s Investors Service late on Wednesday, which took it to within one notch of “junk” status.ECB loans to spanish banks hit new record in may
As Wall Street Journal informs, Spain’s ailing banks boosted borrowing from the European Central Bank (ECB) to a new record in May, official data showed, as they took advantage of emergency cheap loans. Borrowing surged to EUR 287.8 bln (USD 464 bln) from EUR 263.5 bln in April for the fifth consecutive monthly record, Bank of Spain figures showed. Spain may need to wind down one of its bailed-out savings banks, the European Union’s competition chief Joaquin Almunia told in an interview for Reuters Wednesday, warning liquidation of a bank may be preferable if the costs of rescuing it are too high for taxpayers, Mediafax informs. Spain’s economy ministry later said it had no intention to liquidate any bank. He did not identify the lenders. Spain is awaiting final approval from the European Commission for the restructuring plan for three banks rescued by the state: NCG Banco (NovaGalicia), CatalunyaCaixa and Banco de Valencia.