Investor worries slam Spanish stocks
SPANISH stocks fell close to their lowest level in three years yesterday after the government’s borrowing costs jumped again on fears the deficit cannot be reduced successfully.
The Spanish government successfully sold €2.5bn (£2.04bn) of debt, but the yield on 10-year bonds rose from 5.3 per cent at its previous auction to 5.7 per cent yesterday and the IBEX stock index slumped 2.42 per cent over the course of the day.
Meanwhile, consumer confidence across the Eurozone dropped again this month, after several gradual increases since the start of the year, while Italian borrowing costs also rose. Italy’s stocks suffered, with the FTSE MIB falling 1.57 per cent.
The European Commission’s consumer confidence index fell from minus 19.1 in March to minus 19.8 in April, reversing recent signs of optimism.
However, a study out yesterday from Ifo suggested Germany’s economy is even more resilient than thought, and French borrowing costs held steady at a bond auction, underlining the stark divergence between the strong and weak economies in the currency union.
The Ifo institute upgraded its forecast for German economic growth to 0.9 per cent this year and two per cent in 2013, saying the country “is now experiencing an upswing.”