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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 100bn euro ($125bn; £80bn) 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). The FTSE 100 in London rose 0.7%, the Dax in Frankfurt was up 1.8% and the Cac 40 in Paris was up 1.0%. Spain's benchmark index, the Ibex, rose 1.8%. All had earlier made bigger gains.
The FTSE 100 in London rose 0.5%, the Dax in Frankfurt was up 1.4% and the Cac 40 in Paris was up 1.2%. Spain's benchmark index, the Ibex, rose 1.7%. All had earlier made bigger gains. The yields on 10-year Spanish government bonds - an indicator of its cost of borrowing - rose sharply to 6%.
Italian yields briefly rose above 6%.
The Nikkei in Tokyo closed up 2.0%. The Hang Seng in Hong Kong closed up 2.4%.The Nikkei in Tokyo closed up 2.0%. The Hang Seng in Hong Kong closed up 2.4%.
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.
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.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.
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.
'A lot to do'
The rise in Italian bond yields suggests that investors are concerned about whether Italy will be the next country to get into difficulties.
But Italy's economic development minister, Corrado Passera, has said that his country has already taken the necessary measures.
"This great discipline that we have imposed on ourselves in terms of public finances makes us one of the countries best equipped to confront the financial turbulence that Europe finds itself in today," he said.
Official figures on Monday confirmed that the Italian economy had contracted by 0.8% in the first three months of 2012.
Mr Passera conceded that Italy still had "a lot to do" to boost growth.