Stocks tumble on Spanish bank crisis

EUROPEAN STOCK markets tumbled and face further volatility as Spain’s economic and banking crisis intensified and there were renewed fears that Greece may exit the euro zone.

Share prices in Madrid fell to a nine-year closing low as the Spanish government tried to reassure investors about the deepening crisis in the country’s banks and sovereign debt position.

Spanish 10-year yields rose 0.24 percentage points to 6.74 per cent, a euro-era record relative to German bunds and close to the 7 per cent level that pushed Greece, Ireland and Portugal into EU-IMF bailout programmes.

The euro fell to the lowest level in almost two years against the dollar as Spain struggled to rescue its troubled banks, adding to signs the euro debt crisis is spreading to the region’s larger economies.

The currency slid for a seventh day versus the yen, the longest losing streak in four months, after Italy sold less than its maximum target at a debt auction. Italian 10-year yields rose above 6 per cent for the first time since the middle of this month.

DUBLIN

THE ISEQ fell 1.5 per cent as packaging group Smurfit Kappa fell 6.1 per cent to €5.23 a share as new data showed a further weakening in container prices.

Independent News and Media declined 7.4 per cent to 25 cent.

Insurance group FBD did not suffer any major impact from its shareholding in the closed stockbroking firm Bloxham, gaining 0.9 per cent to €8.17 a share, though still below its €8.35 a share value before the news of the closure.

Food group Kerry gained 1.1 per cent to €34.65 a share.

International building materials group CRH, the market’s largest stock representing about a third of the index, fell 2.9 per cent to €14.07 a share, while another building materials stock Kingspan fell 1.7 per cent to €6.90 a share.

LONDON

UK STOCKS fell for the first time in five days as borrowing costs climbed at an auction of Italian debt and Spain struggled to recapitalise its banks, adding to concern the euro area debt crisis is spreading. The FTSE fell by 1.7 per cent to 5,297, ending its longest streak of gains this month.

Royal Bank of Scotland, Lloyds and HSBC, Europe’s largest bank, declined more then 2 per cent as the cost of insuring against default on Spanish sovereign bonds rose to a record.

Vedanta Resources and Xstrata led mining shares lower as the price of copper retreated for a second day.