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| Version 4 | Version 5 |
|---|---|
| Global markets down on debt fears in US and eurozone | Global markets down on debt fears in US and eurozone |
| (about 7 hours later) | |
| Markets worldwide have tumbled on fears over global debt - with another impasse confirmed in the US and continuing fears over the eurozone crisis. | |
| The US Dow Jones index closed down 2.1%, and German and French indexes fell more than 3%. | |
| The US committee charged with cutting the US debt - currently at $15tn (£9.5tn) - has admitted it has failed to find a resolution. | |
| And Spain became the third eurozone member to change government. | |
| In the US, talks between Democrats and Republicans on the Congressional "super-committee" charged with finding $1.2tn (£762bn) in savings to avoid automatic deep spending cuts collapsed. | |
| Meanwhile there were reports the European Commission will discuss so-called eurobonds, in which the eurozone issues debt for all its members. | Meanwhile there were reports the European Commission will discuss so-called eurobonds, in which the eurozone issues debt for all its members. |
| European markets were also rattled by news that credit rating agency Moody's has warned that recent developments could affect France's credit rating. | European markets were also rattled by news that credit rating agency Moody's has warned that recent developments could affect France's credit rating. |
| Moody's said the country's rating could be hit by recent rises in borrowing costs for the French government and a downturn in growth prospects. | Moody's said the country's rating could be hit by recent rises in borrowing costs for the French government and a downturn in growth prospects. |
| "Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications," the agency said. | "Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications," the agency said. |
| Eurobonds | Eurobonds |
| On Wednesday, the European Commission is expected to present a study of three options for joint debt issuance of the 17 countries sharing the euro, but without any conclusions or suggestions as to which one to choose. | On Wednesday, the European Commission is expected to present a study of three options for joint debt issuance of the 17 countries sharing the euro, but without any conclusions or suggestions as to which one to choose. |
| The study brings the eurozone closer to discussing eurobonds - where the debts of each member in the bloc are collectively backed by all rather than individually as it has been since the euro was formed in 1999. | The study brings the eurozone closer to discussing eurobonds - where the debts of each member in the bloc are collectively backed by all rather than individually as it has been since the euro was formed in 1999. |
| But Germany, the largest economy in Europe, has opposed such an idea and responded quickly. | But Germany, the largest economy in Europe, has opposed such an idea and responded quickly. |
| "The chancellor and the federal government share the opinion of many others, that eurobonds are not now a sort of universal cure for the crisis," German Chancellor Angela Merkel's spokesman said. | "The chancellor and the federal government share the opinion of many others, that eurobonds are not now a sort of universal cure for the crisis," German Chancellor Angela Merkel's spokesman said. |
| Germany has been the largest contributor to the bailouts of its eurozone peers. | Germany has been the largest contributor to the bailouts of its eurozone peers. |
| On Monday, European Central Bank member Juergen Stark warned that the crisis had spread from the periphery of the eurozone to the "most advanced" economies inside. | On Monday, European Central Bank member Juergen Stark warned that the crisis had spread from the periphery of the eurozone to the "most advanced" economies inside. |
| Spain election | Spain election |
| Spanish markets fell despite a resounding victory for the country's centre-right Popular Party in the election. | Spanish markets fell despite a resounding victory for the country's centre-right Popular Party in the election. |
| Stocks in Madrid fell 3.4% while the government's cost of borrowing rose. | Stocks in Madrid fell 3.4% while the government's cost of borrowing rose. |
| Last week, Spain's borrowing costs hit the highest since the eurozone was formed, when it sold 10-year bonds at an interest rate of 6.975% at an auction. | Last week, Spain's borrowing costs hit the highest since the eurozone was formed, when it sold 10-year bonds at an interest rate of 6.975% at an auction. |
| Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule. Glossary in full | Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule. Glossary in full |
| The figure was perilously close to 7% - the level at which other eurozone countries have had to seek bailouts. | The figure was perilously close to 7% - the level at which other eurozone countries have had to seek bailouts. |
| Although the Spanish government is not so heavily indebted compared to its eurozone peers, the country suffers from excessive mortgage debts following a burst property bubble, as well as heavy company debts. | Although the Spanish government is not so heavily indebted compared to its eurozone peers, the country suffers from excessive mortgage debts following a burst property bubble, as well as heavy company debts. |
| Spain also has the highest unemployment in Europe, and its economic growth has stagnated. | Spain also has the highest unemployment in Europe, and its economic growth has stagnated. |
| On Monday, the yield - or implied borrowing rate - on the benchmark 10-year bond rose a fifth of a percentage point to 6.48%. | On Monday, the yield - or implied borrowing rate - on the benchmark 10-year bond rose a fifth of a percentage point to 6.48%. |
| The Popular Party head and incoming prime minister, Mariano Rajoy, told supporters there would be "no miracle" to restore Spain's financial health. | The Popular Party head and incoming prime minister, Mariano Rajoy, told supporters there would be "no miracle" to restore Spain's financial health. |
| Italian 10-year bond yields passed 7% earlier this month and, on Monday, yielded 6.63%. | Italian 10-year bond yields passed 7% earlier this month and, on Monday, yielded 6.63%. |
| In addition to the newly-elected government ahead in Spain, led by Mariano Rajoy, both Greece and Italy have seen their governments fall in the past three weeks. | In addition to the newly-elected government ahead in Spain, led by Mariano Rajoy, both Greece and Italy have seen their governments fall in the past three weeks. |
| Greece's new Prime Minister, Lucas Papademos, is in Brussels to persuade the European Union to release its latest slice of aid, even as one of his coalition partners refused to give a written pledge to support reforms. | Greece's new Prime Minister, Lucas Papademos, is in Brussels to persuade the European Union to release its latest slice of aid, even as one of his coalition partners refused to give a written pledge to support reforms. |
| Separately, billionaire investor Warren Buffett said that the crisis had exposed a "major flaw" in the eurozone. | Separately, billionaire investor Warren Buffett said that the crisis had exposed a "major flaw" in the eurozone. |