DY: Eurozone finance chiefs meet again as Spanish bond yields pass
Eurozone finance chiefs will meet later today in yet another bid to halt the financial crisis as Spanish bond yields moved above the critical seven per cent and the Euro hit a year low.
The leaders will flesh out plans to reinforce the single currency but their talks in Brussels may do little more than highlight the limitations of last month's deal to help indebted states and banks.
Spain's borrowing costs on its benchmark 10-year bond hit seven per cent critical level - the point at which other nations have required bailouts.
The interest rate is considered unaffordable for a country to raise money on the bond markets in the long term.
Spanish officials have said that the finance ministers' meeting could decide how much money the country's stricken banks need from a lifeline of up to (euro) 100 billion ($124 billion).
Investors fear a full-blown bailout of Spanish public finances would be too large to handle. The country's economy is the eurozone's fourth-largest and is larger than Portugal, Ireland and Greece combined.
The worsening problems in Spain caused market indicies across the continent to fall with the euro hovering near a two-year low. The single currency was off a low of $1.2225, which it hit in thin early trade, to be up just 0.1 percent against the dollar at $1.2276.
In the UK, the FTSE-100 index was down 18 pips by mid-afternoon, continuing its fourth day of falls.
Spain, which has applied for up to 100 billion euros ($123.07 billion) from Europe to recapitalise its banks, said at the weekend it would take more austerity measures in coming days but also called for greater urgency from its euro zone partners.
The premium investors demand to leave the safety of German debt to hold equivalent 10-year Spanish bonds rose to 578 bps, nearing its all-time high as doubts over the prospects of any action from the Eurogroup meeting later today in Brussels grew.
Weaker than expected Chinese inflation data was fuelling the heightened growth fears in equity markets that had followed the disappointingly weak U.S. jobs report on Friday, leaving the MSCI world index down 0.3 percent at 310.05 points.
However, the data was also seen boosting the prospects for stimulus from the world's major central banks, limiting the losses.
Chinese Premier Wen Jiabao said on Sunday that more aggressive efforts to fine-tune economic policies were needed to support an economy still under downward pressure.
