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| Spanish economy shrinking at 'significant rate' | Spanish economy shrinking at 'significant rate' |
| (about 1 hour later) | |
| The Spanish economy continued to shrink at a "significant rate" in the third quarter, the Bank of Spain has said. | The Spanish economy continued to shrink at a "significant rate" in the third quarter, the Bank of Spain has said. |
| Spain is currently in a deepening recession, with the unemployment rate at its highest level since the 1970s. | Spain is currently in a deepening recession, with the unemployment rate at its highest level since the 1970s. |
| Economy Minister Luis de Guindos said on Saturday he expected the economy to contract by about 0.4% in the July-to-September quarter. | Economy Minister Luis de Guindos said on Saturday he expected the economy to contract by about 0.4% in the July-to-September quarter. |
| European markets were trading lower, with concerns about Spain adding to fears over global growth. | European markets were trading lower, with concerns about Spain adding to fears over global growth. |
| Spain's Ibex index was down 2.3%, while markets in London, Paris and Frankfurt were down more than 1%. | Spain's Ibex index was down 2.3%, while markets in London, Paris and Frankfurt were down more than 1%. |
| Spain's borrowing costs also rose, with the yield on 10-year Spanish bonds traded on international markets rising to 6.02% from 5.67%. | |
| The Bank of Spain said in a monthly report: "Available data for the third quarter of the year suggests that GDP kept falling at a significant rate, in a context of high financial tensions." | The Bank of Spain said in a monthly report: "Available data for the third quarter of the year suggests that GDP kept falling at a significant rate, in a context of high financial tensions." |
| Separately, French bank Societe Generale said that it had further cut its exposure to Spanish sovereign debt, to 400m euros ($515m; £318m) by the end of August, from 700m euros at the end of June. | Separately, French bank Societe Generale said that it had further cut its exposure to Spanish sovereign debt, to 400m euros ($515m; £318m) by the end of August, from 700m euros at the end of June. |
| Bailout | |
| The Spanish government has introduced highly unpopular spending cuts and tax rises as it attempts to reduce the country's deficit. | |
| An anti-austerity rally outside the parliament in Madrid on Tuesday turned violent, with police firing rubber bullets and baton-charging protesters. | |
| Spanish media reported that at least 20 people had been arrested and more than a dozen injured. | |
| The government will present details of an emergency budget and further austerity measures on Thursday. | |
| As the government struggles to avoid a full bailout, the Catalan regional government has called snap elections for 25 November, which will be seen effectively as a referendum on Catalan independence. | |
| The election could jeopardise plans for national economic reforms. | |
| There is real concern in Europe that Spain may need an international bailout going beyond the 100bn euros pledged by eurozone finance ministers in June to rescue its banks, but Prime Minister Mariano Rajoy has so far avoided requesting one. | |
| "The markets have been getting very, very worried about this delay," Philip Tyson from ICAP told the BBC. | |
| "To activate a bond-buying programme by the ECB [Mr Rajoy] needs to apply for a bailout and he seems to be resisting." | |
| Responsibility for banks? | |
| On Tuesday, Germany, the Netherlands and Finland issued a joint statement setting out the terms under which they would be willing to let the European Stability Mechanism (ESM), the eurozone's permanent bailout fund, recapitalise banks that find themselves in trouble. | |
| The statement appeared to go against what was agreed by EU leaders in June that paved the way for the direct recapitalisation of problem banks. | |
| The three countries distinguished between future banking problems and "legacy" difficulties, implying that highly indebted banks would remain the responsibility of their countries' governments. | |
| Spain and Ireland had both seen the June summit as implying that a way would be found to break the link between their indebted banks and the debts of the government. |