European Debt Fears Hit Markets After Stress Tests

[alp227]

Source: Associated Press

LONDON (AP) — Worries that Europe's debt crisis will spread to Italy and Spain spooked investors Monday after stress tests into the continent's banks failed to ease tensions ahead of an emergency meeting of EU leaders.

In afternoon trading, most of Europe's main stock markets were sharply lower, with bank shares hit particularly hard, while the euro fell 0.6 percent to $1.4041.

In a sign that contagion fears have not been allayed by last week's European bank stress test results, yields on Italian and Spanish bonds ratcheted up, in contrast to most other large economies.

The rate on ten-year Italian bonds spiked up 0.25 percentage point to 5.92 percent, having earlier jumped above 6 percent, even though the Parliament backed an austerity package designed to get the public finances back on an even keel. The Spanish rate rose 0.15 percentage point to 6.23 percent.

Read more: http://www.nytimes.com/aponline/2011/07/18/business/AP-EU-Europe-Financial-Crisis.html