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| Eurozone crisis live: Greek and Spanish fears hit markets again | Eurozone crisis live: Greek and Spanish fears hit markets again |
| (40 minutes later) | |
| 8.10am: European stock markets have fallen at the start of trading, with Spain's IBEX showing the steepest losses. | |
| The IBEX shed 128 points, or 2%, at the start of trading, hitting a new nine-year low of 6409 points. That follows Moody's downgrading much of the Spanish banking sector last night (see 7.49am) | |
| In London, the FTSE 100 is down 50 points at 5289, a new low for the year. Just four shares have risen, while mining companies and banks are leading the fallers. Rio Tinto, Xstrata, Lloyds Banking Group and Barclays are all down at least 2.5%. | |
| It's a similar tale across Europe, with the Italian FTSE MIB down 1.5% and the French and German markets dropping around 1%. | |
| 7.56am: Risk aversion has driven the US dollar up this morning, as traders look to put their money somewhere safe. | |
| This has pushed the euro down to a new four-month low of $1.2649 against the US dollar. | |
| It has also pushed the oil price to its lowest level of the year, with a barrel of Brent crude dropping $1 to $106.40. That might actually bring some relief to the global economy, as high fuel and energy prices have been blamed for pushing up inflation. | |
| 7.49am: Moody's decision to downgrade much of Spain's banking sector last night has put country's financial problems under even more scrutiny. | |
| Some downgrades had been anticipated, but the scale of the move is still quite dramatic – with 16 banks downgraded in total and some, including the giant Santander, by three notches. | |
| Moody's blamed the weak Spanish economy (currently in recession), and the Madrid government's reduced ability to support troubled lenders, given its own problems. | |
| Amidst the ongoing euro area debt crisis, the Spanish government's rising budget deficit and the renewed recession, sovereign creditworthiness has declined. | |
| Spain's banking sector was also reeling from reports, officially denied, that worried customers were pulling deposits out of Bankia. | |
| As analysts at Investec comment, "It's not going to go down in history as a great day for Spanish banks." | |
| 7.38am: Fears over the health of the Spanish banking sector, and the looming threat of a eurozone break-up, hit Asian markets hard overnight. | 7.38am: Fears over the health of the Spanish banking sector, and the looming threat of a eurozone break-up, hit Asian markets hard overnight. |
| In Tokyo, the Nikkei fell by 2.99% at 8611.31, its lowest level since January. The index has now fallen for seven weeks in a row -- its worst performance since 2001. Hong Kong's Hang Seng index is down -2.69%. | In Tokyo, the Nikkei fell by 2.99% at 8611.31, its lowest level since January. The index has now fallen for seven weeks in a row -- its worst performance since 2001. Hong Kong's Hang Seng index is down -2.69%. |
| Ben Kwong, Hong Kong-based chief operating officer at KGI Asia, called it straight: | Ben Kwong, Hong Kong-based chief operating officer at KGI Asia, called it straight: |
| It's really bad.... | It's really bad.... |
| Fears of a Greek exit from the euro zone and the negative consequences from that are prevailing. | Fears of a Greek exit from the euro zone and the negative consequences from that are prevailing. |
| Australian stocks were also hit overnight, particulaly banks and miners (with National Australia Bank falling 4.23%, and Rio Tinto down 5%). Warnings that China's economic growth might be lower than expected this year also hit sentiment. | Australian stocks were also hit overnight, particulaly banks and miners (with National Australia Bank falling 4.23%, and Rio Tinto down 5%). Warnings that China's economic growth might be lower than expected this year also hit sentiment. |
| Chris Weston, institutional trader at IG, was also in bleak mood, predicting a "dark and tiresome open" in European markets. | Chris Weston, institutional trader at IG, was also in bleak mood, predicting a "dark and tiresome open" in European markets. |
| The world is bereft of good news | The world is bereft of good news |
| 7.35am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis. | 7.35am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis. |
| Not that there's much 'good' about this morning. The escalating crisis having sparked heavy losses in Asian stock markets overnight, and another sell-off expected in Europe today. | Not that there's much 'good' about this morning. The escalating crisis having sparked heavy losses in Asian stock markets overnight, and another sell-off expected in Europe today. |
| There are two factors behind the sell-off: Fitch downgrading Greece yesterday evening on concerns that it might soon leave the eurozone and default, and Moody's decision to downgrade 16 Spanish banks. | There are two factors behind the sell-off: Fitch downgrading Greece yesterday evening on concerns that it might soon leave the eurozone and default, and Moody's decision to downgrade 16 Spanish banks. |
| Those two developments capture the essence of the crisis today – Greece pushed to the brink of euro exit by austerity, a long recession and an huge debt mountain, and Spain battling to avoid the same fate. We'll be watching both countries today. | Those two developments capture the essence of the crisis today – Greece pushed to the brink of euro exit by austerity, a long recession and an huge debt mountain, and Spain battling to avoid the same fate. We'll be watching both countries today. |
| World leaders are gathering in the US for the G8 summit, facing the growing threat of a global downturn. Barack Obama is expected to demand that Europe bows to pressure at home and abroad with new policies to boost growth. | World leaders are gathering in the US for the G8 summit, facing the growing threat of a global downturn. Barack Obama is expected to demand that Europe bows to pressure at home and abroad with new policies to boost growth. |