Bank shares suffer over Spain fears

 

Fresh fears about the Spanish economy triggered a pummelling for bank
shares today as markets failed to make meaningful gains following Greek
elections.

The FTSE 100 Index surged more than 1% in early trading after pro-bailout party New Democracy secured a narrow win in yesterday's vote, giving the embattled country more time to remain in the eurozone.

But any benefit proved short-lived as uncertainty over whether the party would forge a coalition Government combined with a worrying rise in Spain's borrowing cost to levels that forced Greece, Ireland and Portugal to seek bailouts.

Royal Bank of Scotland was down 5%, with Barclays and Lloyds suffering hefty falls, after Spain released data showing that the amount of risky loans in its banks hit 18-year highs.

The FTSE 100 Index surrendered most of its earlier gains to finish up 12.3 points at 5491.1. The Dow Jones Industrial Average in the US was down 0.3% as the London market closed.

Michael Hewson, senior market analyst at CMC Markets, said: "The reality remains that Greece's fiscal position remains unsustainable and, more than that, the continued deterioration in the viability of Spanish banks continues to worry markets."

Following the Greek elections, New Democracy, led by Antonis Samaras, will seek to form a coalition government after it secured 29.7% of the vote against anti-austerity group Syriza's 26.9%. World leaders have urged Athens to act quickly.

Greece has had to adopt a range of far-reaching austerity measures as a condition of receiving rescue loans from the European Union and International Monetary Fund.

Without the EU bailout cash, Greece would go bankrupt and probably have to leave the 17-country bloc.

But uncertainty remains over how and when a coalition government will be formed - and whether it will last.

Graeme Leach, chief economist at the Institute of Directors, said: "Don't be deceived into thinking the political and economic fundamentals in Greece have changed with the election result.

"They haven't. The day of reckoning has merely been delayed slightly."

As well as Spain, Italy saw its borrowing costs push higher as well, with interest rates sitting above the 6% mark.

PA

Independent Comment
blog comments powered by Disqus
News in pictures
World news in pictures
       

Day In a Page

Watch out Watford: Here comes the secretive Bilderberg Group

Watch out Watford: Here comes the secretive Bilderberg Group

A meeting of global power brokers in a Hertfordshire hotel is exciting conspiracy theorists, but what are they really about?
'The ultimate all-in-one home entertainment system': Microsoft finally unveils its Xbox ONE console

'The ultimate all-in-one home entertainment system'

Microsoft finally unveils its Xbox ONE console
Plenty of Fish dating site founder pulls 'Intimate Encounters' option to ward off sleazy men

Plenty of sleaze

Dating website pulls intimate 'hook-up' section to curb harassment
Inferno author Dan Brown 'honoured' to be invited to join the Freemasons

The Freemasons’ Code

Dan Brown reveals the message that told him door to the lodge is open
Not secure any more: G4S boss heads for exit at last

Not secure any more: G4S boss heads for exit at last

Nick Buckles survived the Olympics débâcle and a £5bn bid fiasco but a profit warning finally triggered his downfall
How to say ‘I’m a sellout’: Tumblr’s David Karp’s message of reassurance to his staff sounded very familiar

How to say ‘I’m a sellout’

Tumblr’s David Karp’s message of reassurance to his staff sounded very familiar
Why clubs are keen to take a stand

Why clubs are keen to take a stand

There's a real desire around the grounds for safe standing. But will the authorities listen?
In the end the fans decided Tony Pulis had made a pig's ear of the job at Stoke City

In the end the fans decided Tony Pulis had made a pig's ear of the job at Stoke City

Disillusion with a siege mentality and negative playing style made change inevitable
James Lawton: The James Hunt I knew is the subject of a new F1 movie

James Lawton: The James Hunt I knew is the subject of a new F1 movie

British driver was fascinating man whose epic duel with Niki Lauda in 1976 was typical of an era of glamour and glory – but also the ever-present threat of death
Stuart Hogg: Ready to climb his own Everest

Stuart Hogg: Ready to climb his own Everest

Lions' cub, 20, joins long line of players from Scottish borders club Hawick given opportunity to make his mark at highest level
Carl Froch handed rare chance of revenge with dream rematch

Steve Bunce on Boxing

Carl Froch handed rare chance of revenge with dream rematch against Mikel Kessler
'There is a battle going on inside us that is never discussed'

Masculinity in crisis?

'There is a battle going on inside us that is never discussed'
Have US shock jocks gone too far?

Have US shock jocks gone too far?

An incendiary remark from Rush Limbaugh may be the beginning of the end for outspoken right-wing US broadcasters
The ‘Beverly Hills’ of Surrey pays more income tax than big cities of the North

The ‘Beverly Hills’ of Surrey

Elmbridge pays more income tax than big cities of the North
Heavenly Bodies

Heavenly Bodies

Michael Landy's artistic marriage made in heaven... and hell