Business World

Tuesday 24 October 2017

Fears of wider Euro crisis keep spreading through markets

A trader at his desk at Frankfurt Stock Exchange yesterday
A trader at his desk at Frankfurt Stock Exchange yesterday
Donal O'Donovan

Donal O'Donovan

IRELAND's bailout failed to stop fears of the debt crisis spreading through the eurozone yesterday.

European stock markets fell after some early gains; Britain's FTSE fell 2pc, Germany's Dax index slumped 2.2pc and Germany's CAC tumbled 2.4pc.

Irish government bond yields eased initially as the market digested the bailout news but rose later in the day.

The yield -- or interest rate charged -- on Irish bonds was 9.47pc by late yesterday, compared with the 5.8pc cost of borrowing from the rescue fund.

A badly received debt auction by Italy reflected shaky market confidence further.

The yield on Spain's 10- year government debt increased to 5.48pc -- the highest level since 2002. The cost of insuring Spanish bonds against a default hit a record 3.50pc, meaning it costs €350,000 per year to insure €10m of bonds.

The cost of insuring Portuguese bonds also hit a record at 5.45pc.

"The markets have already moved on," was one bond investor's terse assessment of the chaotic trading after the deal for Ireland failed to ease the pressure.

Spain and Italy are now under the spotlight, with even Belgium under pressure.

This leaves the ECB with a dilemma, as it has promised to tell markets this week whether it will continue to withdraw support measures put in place during the financial crisis.

Irish Independent

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