Wednesday, June 16, 2010

Spain becomes new euro flashpoint - The Globe and Mail

Russia begins buying Canadian dollar, Spain becomes new euro flashpoint - The Globe and Mail: "Spain is fast overtaking Greece as the flashpoint for Europe’s debt crisis. Rumours related to Spain, immediately denied today, sent the euro temporarily tumbling while the country’s borrowing costs hit a fresh record. Separately today, the Financial Times reported that Spain’s banks are borrowing record amounts from the European Central Bank, with €85.6-billion in borrowing last month the highest since the launch of euro zone in 1999.
“Rumours were rampant in the overnight session that Spain was negotiating a €250-billion credit facility with the U.S., IMF, and EU,” said BMO Nesbitt Burns economist Benjamin Reitzes. “That hit the euro, which fell nearly a cent on the report, while equities were sold briefly as well. The rumour was quickly denied, and frankly seems ridiculous, as the U.S. is extremely unlikely to a major participant in any European loan deal. Moreover, a loan facility already exists ... so why create a separate package? Spain is planning €3.5-billion in 10 and 30-year auctions tomorrow, and the manner in which they are received by markets will be watched closely. Nerves are already fragile on negative stories over Spain's banks.”"