Markets hammer Spanish bondsAugust 3rd, 2011 - 1:20 pm ICT by IANS
Madrid, Aug 3 (IANS/EFE) Prime Minister Jose Luis Rodriguez Zapatero decided to postpone his summer break after the risk premium on Spanish government bonds climbed to a record 400 basis points Tuesday, easing to 387 points by the close of the trading day.
The premium is the difference in yield between Spanish 10-year bonds and benchmark German bonds.
Zapatero and Deputy Prime Minister Elena Salgado were in touch throughout the day with officials and experts at home and abroad, the Spanish government said in a statement.
Salgado, who is also economy minister, and her aides reached out to their counterparts in other eurozone nations, notably Germany, France and Italy, to discuss the ongoing turmoil in financial markets.
The deal between Democrats and Republicans in the US to raise the debt limit and avert a potential default did little to reassure global financial markets, which continued to put pressure on Spain, Italy and other highly indebted European countries.
Economic policymakers in the 27-member European Union are in agreement on the need for coordinated responses in the face of economic and financial instability, the Spanish government said.
“The current situation is due to the financial crisis lashing the eurozone aggravated by the uncertainty of the economic situation in the United States,” the statement said.
Zapatero telephoned European Commission President Jose Manuel Durao Barroso to convey the need to “expedite the application of the measures agreed at the most recent Eurogroup meeting” on July 21, according to officials in Madrid.
The prime minister also discussed the situation with Mariano Rajoy, leader of the main opposition Popular Party, and representatives of other domestic political organizations.
Analysts attributed Tuesday’s renewed pressure on Spanish and Italian debt to general market unease fueled by discouraging new figures on industrial activity in the US, China and Europe.
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