Italy and Spain latest bailout targets in new euro debt fears
Published 03/08/2011 | 10:49
Italy has been forced to seek European support as its stock and bonds came under new attack today against the backdrop of eurozone debt fears and a global economic slowdown.
The cost of borrowing for both Italy and Spain have risen above 6pc – hitting 14 year highs - and edging closer to a rate at which they will no longer be able to borrow on international markets – in Ireland’s case that was 7pc.
Italian economic Minister Giulio Tremonti met eurozone finance boss, Jean-Claude Juncker, for emergency talks while bank shares also plummeted.
Prime minister Silvio Berlusconi will address parliament later today to try and calm markets.
Less than two weeks after the 17 leaders of the eurozone agreed on a second bailout for Greece, the debt crisis has returned, analysts said.
But the euro zone's rescue fund cannot yet use new powers granted to it at last month's summit to either buy bonds in the secondary market or lend to states until the plans are approved by national leaders in late September.
In France, Societe Generale warned it could miss its 2012 profit target after taking a €395m hit on its exposure to Greek debt.
While in Switzerland, the Swiss National Bank cut its interest rate target and is planning to devalue the Swiss franc which has become a refuge for investors, along with gold, amid turbulence on stock markets.
The FTSE index of top European shares was down nearly 1pc having hit a year-low earlier.
The US, which stepped back from the brink of bankruptcy on Tuesday, has also shown weak data in recent days including a weakness in consumer spending and manufacturing figures.