Spain and Italy welcome ECB moves
THE PRIME ministers of Spain and Italy said they welcomed the European Central Bank’s announcement yesterday that included a stated willingness to buy sovereign bonds of struggling nations, although neither indicated whether they would use the mechanism.
Italy’s Mario Monti met with Spanish leader Mariano Rajoy in Madrid to discuss their countries’ difficulties, including the punishment they have received at the hands of bond markets in recent weeks.
They emerged from their summit shortly after ECB president Mario Draghi said the institution was prepared to step into the bond market to lower borrowing costs. Mr Draghi said any country wanting such help would have to apply to the euro zone’s rescue funds.
Neither Mr Monti nor Mr Rajoy would say whether they will request such help. After ruling out a bailout for his country, the Italian leader said his government would “have to study” such a move. Mr Rajoy would not be drawn on the issue.
Instead, he focused on what he described as other, “positive” aspects of the ECB announcement, such as the permanence of the single currency.
The Madrid stock exchange closed 5.2 per cent down, while Milan lost 4.6 per cent. The Spanish risk premium on its sovereign debt rose sharply to 594 points, with Italy’s rising to 510 points at close.