Spanishand Italian markets fall
Spanish and Italian markets tumbled yesterday, bringing a months-long rally to an abrupt halt as investors pulled back amid a political storm in Madrid and as Silvio Berlusconi staged an electoral fightback in Italy.
Yields on Spanish sovereign debt suffered their biggest one-day percentage jump since September as the row over slush fund allegations engulfing Mariano Rajoy, Spanish prime minister, and his party rattled investors.
Mr Rajoy over the weekend denied allegations first made in El País that the prime minister's centre-right Popular Party operated a slush fund from which it paid money to senior party leaders, including Mr Rajoy himself. But with Spain's opposition party calling on Mr Rajoy to resign as prime minister over the allegations, Spain's benchmark 10-year bonds rose 23 basis points to 5.44 per cent. Yields move inversely to prices.
The unease over Spain rippled across the euro zone, however, with benchmark German Bund yields falling as investors sought havens.
Yields on Italian 10-year bonds rose 14 basis points to 4.47 per cent as nervousness grew over the outcome of Italy's general election.
- Copyright The Financial Times Limited 2013