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| Investor fears hit Spanish bonds as Bankia shares drop | Investor fears hit Spanish bonds as Bankia shares drop |
| (40 minutes later) | |
| Investors are judging Spain's debt as the riskiest it has been as fears grow over the health of the country's banking sector. | |
| The premium for Spain's 10-year bond over its German equivalent rose to 5.05 percentage points, the highest since the euro was formed. | The premium for Spain's 10-year bond over its German equivalent rose to 5.05 percentage points, the highest since the euro was formed. |
| While most European shares gained, Spanish and Greek stocks fell. | While most European shares gained, Spanish and Greek stocks fell. |
| The Spanish prime minister admitted on Monday that the situation in Spain was "extremely difficult". | The Spanish prime minister admitted on Monday that the situation in Spain was "extremely difficult". |
| "There are major doubts over the eurozone and that makes the risk premium for some countries very high," said Mariano Rajoy in a press conference. | "There are major doubts over the eurozone and that makes the risk premium for some countries very high," said Mariano Rajoy in a press conference. |
| "That's why it would be a very good idea to deliver a clear message there's no going back for the euro." | "That's why it would be a very good idea to deliver a clear message there's no going back for the euro." |
| Some considered that was a reference to the European Central Bank (ECB) coming in to buy the debt of eurozone countries that are finding it more expensive to borrow on international markets. | Some considered that was a reference to the European Central Bank (ECB) coming in to buy the debt of eurozone countries that are finding it more expensive to borrow on international markets. |
| Mr Rajoy added: "There will not be any (European) rescue for the Spanish banking system" but backed calls for the European rescue fund to be able to lend to banks directly. | Mr Rajoy added: "There will not be any (European) rescue for the Spanish banking system" but backed calls for the European rescue fund to be able to lend to banks directly. |
| The higher bond yields rise, the more expensive it is for governments to borrow and roll over their debts. | The higher bond yields rise, the more expensive it is for governments to borrow and roll over their debts. |
| There is speculation that Spain might ask the ECB to help the government so it will not need the permanent rescue fund, which will be up and running from July. | There is speculation that Spain might ask the ECB to help the government so it will not need the permanent rescue fund, which will be up and running from July. |
| Shares in Spain's Bankia initially fell 27% before trimming losses to 11% later on Monday after it requested a 19bn-euro ($24bn, £15bn) bailout on Friday. | |
| The amount Bankia needs in state aid was higher than had been feared. | The amount Bankia needs in state aid was higher than had been feared. |
| It marks an effective nationalisation for the country's third-largest bank and has raised fears about how Spain plans to pay for it. | It marks an effective nationalisation for the country's third-largest bank and has raised fears about how Spain plans to pay for it. |
| Bankia is estimated to have 32bn euros in toxic assets. Just under a year ago the Bank of Spain injected 4.5bn euros in rescue funds into Bankia. | Bankia is estimated to have 32bn euros in toxic assets. Just under a year ago the Bank of Spain injected 4.5bn euros in rescue funds into Bankia. |
| "Can Spain bypass the ECB and print its way out of the crisis by using sovereign debt to pay for assets of dubious quality with no guarantee things won't get worse and the central government will get its money back?" asked Kathleen Brooks, research director at Forex.com. | "Can Spain bypass the ECB and print its way out of the crisis by using sovereign debt to pay for assets of dubious quality with no guarantee things won't get worse and the central government will get its money back?" asked Kathleen Brooks, research director at Forex.com. |
| She said "it seems only a matter of time" until bond investors test the high of 6.7% reached in November 2011. | |
| Elisabeth Afseth, an analyst at Investec, said that rising bond yields in certain parts of the eurozone would make it harder to bring the 17-strong bloc closer together. | |
| "If it goes on for much longer, it just adds to the burden of fiscal consolidation, she said. | |
| "If a large part of that (the yield) is spent on paying a premium to borrow, it just makes it so much harder." | |
| Italian government bond yields also ticked higher, rising to 5.87%. | Italian government bond yields also ticked higher, rising to 5.87%. |
| Greece poll 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 minuscule. Glossary in full | Greece poll 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 minuscule. Glossary in full |
| Despite the worries about Spain, other European stock markets traded higher. | Despite the worries about Spain, other European stock markets traded higher. |
| Shares were boosted after a weekend poll in Greece showed growing support for a pro-austerity conservative party. | Shares were boosted after a weekend poll in Greece showed growing support for a pro-austerity conservative party. |
| The poll suggested the New Democracy party could gain about a quarter of the votes, leaving it as the biggest party, albeit without overall control. | The poll suggested the New Democracy party could gain about a quarter of the votes, leaving it as the biggest party, albeit without overall control. |
| Greek shares rose 7% by Monday afternoon trading. The next elections are scheduled for 17 June. | |
| London, Paris and Frankfurt markets all rose at least 1% at the start of trading, before trimming gains to around half that.Although both Germany and France have a public holiday on Monday, their equity markets remain open. | |