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Markets welcome Spanish banks rescue deal | Markets welcome Spanish banks rescue deal |
(40 minutes later) | |
Markets in Europe and Asia have risen in response to the bailout of Spain's banks that was agreed over the weekend. | Markets in Europe and Asia have risen in response to the bailout of Spain's banks that was agreed over the weekend. |
On Saturday, eurozone ministers agreed to lend Spain's banks up to 100bn euros ($125bn; £80bn). | On Saturday, eurozone ministers agreed to lend Spain's banks up to 100bn euros ($125bn; £80bn). |
In morning trading, the FTSE 100 in London rose 1.4%, the Dax in Frankfurt was up 2.1% and Cac 40 in Paris was up 2.2%. Spain's benchmark index, the Ibex in Madrid, rose 3.8%. | In morning trading, the FTSE 100 in London rose 1.4%, the Dax in Frankfurt was up 2.1% and Cac 40 in Paris was up 2.2%. Spain's benchmark index, the Ibex in Madrid, rose 3.8%. |
The euro gained more than one cent against the US dollar. | The euro gained more than one cent against the US dollar. |
Spain's weakest banks were left with billions of euros of bad loans following the collapse of a property boom and the subsequent recession. | Spain's weakest banks were left with billions of euros of bad loans following the collapse of a property boom and the subsequent recession. |
Earlier, the Nikkei in Tokyo closed up 2.0%. The Hang Seng in Hong Kong closed up 2.4%. | Earlier, the Nikkei in Tokyo closed up 2.0%. The Hang Seng in Hong Kong closed up 2.4%. |
On the bond markets, the yield on Spanish 10-year bonds briefly dropped below 6%. Bond yields are taken as an indication of the interest rates that governments would need to pay to borrow money. | |
European banks led the stock market gains, with Lloyds up 7.3%, Barclays and RBS both up 4.7%, Credit Agricole up 4.5%, Societe Generale up 4.4%, Commerzbank up 3.8% and Deutsche Bank up 3.4%. | European banks led the stock market gains, with Lloyds up 7.3%, Barclays and RBS both up 4.7%, Credit Agricole up 4.5%, Societe Generale up 4.4%, Commerzbank up 3.8% and Deutsche Bank up 3.4%. |
The exact amount of emergency funding that Spain will receive will be decided after two audits of its banks are completed within the next few days. | The exact amount of emergency funding that Spain will receive will be decided after two audits of its banks are completed within the next few days. |
Spain is in its second recession in three years and the economy is expected to shrink by 1.7% this year. | Spain is in its second recession in three years and the economy is expected to shrink by 1.7% this year. |
"The Spanish announcement is not a solution to the eurozone's ongoing woes, but it is a statement of intent," said Richard Hunter from Hargreaves Lansdown stockbrokers. | "The Spanish announcement is not a solution to the eurozone's ongoing woes, but it is a statement of intent," said Richard Hunter from Hargreaves Lansdown stockbrokers. |
"Some much-needed time has now been bought in Spain, which will allow the market an at least temporary sigh of relief." | "Some much-needed time has now been bought in Spain, which will allow the market an at least temporary sigh of relief." |
'Happy or humiliated' | 'Happy or humiliated' |
Spanish journalist Miguel-Anxo Murado told BBC News that many Spanish people were surprised there had been a bailout at all. | Spanish journalist Miguel-Anxo Murado told BBC News that many Spanish people were surprised there had been a bailout at all. |
"The government has been very successful at denying the need for this bailout," he said. | "The government has been very successful at denying the need for this bailout," he said. |
"Now the controversy is actually whether we should be happy or humiliated about this." | "Now the controversy is actually whether we should be happy or humiliated about this." |
There were demonstrations against the bailout in Spain on Sunday. | There were demonstrations against the bailout in Spain on Sunday. |
The Spanish government said in a statement late on Sunday that it was committed to its programme of economic reforms. | The Spanish government said in a statement late on Sunday that it was committed to its programme of economic reforms. |
In a statement on the economics ministry's website, it said the Spanish Treasury would continue to borrow money commercially and would continue with its planned programme of bond auctions. | In a statement on the economics ministry's website, it said the Spanish Treasury would continue to borrow money commercially and would continue with its planned programme of bond auctions. |
The next bond auctions scheduled are short-term sales on 19 and 21 June, after the Greek elections on 17 June, which will be the next key test for the eurozone. | The next bond auctions scheduled are short-term sales on 19 and 21 June, after the Greek elections on 17 June, which will be the next key test for the eurozone. |
The government has been keen to stress that it is the banks that have been bailed out, not the country. | The government has been keen to stress that it is the banks that have been bailed out, not the country. |
But in an interview on Monday morning, EU competition commissioner Joaquin Almunia said there would be a troika of authorities to oversee the financial assistance, just as happened with Greece, Portugal and the Republic of Ireland. | But in an interview on Monday morning, EU competition commissioner Joaquin Almunia said there would be a troika of authorities to oversee the financial assistance, just as happened with Greece, Portugal and the Republic of Ireland. |
The troika will be made up of the International Monetary Fund, the European Central Bank and the Eurogroup of eurozone finance ministers. | The troika will be made up of the International Monetary Fund, the European Central Bank and the Eurogroup of eurozone finance ministers. |