Spain panic sparks sell-off

25th May 2010 09:22

Increasing fears about a possible bailout of Spain and growing military tensions between North and South Korea have sent global stock markets crashing again. Banks and miners were the main casualties in Europe. Spain's Banco Popular is more than 8% lower, while Societe Generale, Credit Agricole and Lloyds Banking fell around 7%.Markets in London, Frankfurt and Paris are all posting triple-digit losses, while the euro extended yesterday's decline against the US dollar.Spain's authorities on Saturday stepped in to rescue CajaSur, a regional savings bank controlled by the Vatican. The lender has been struggling due to its exposure to the collapse in the Spanish property sector. The International Monetary Fund yesterday told Spain it must reform its creaking banking system as the country attempts to slash its huge budget deficit and unemployment at 20%. Traders have been worrying for weeks that Spain, Portugal or Italy could go the same way as Greece, bailed out last month to the tune of €110bn. Even the European Union's gigantic €750bn loan guarantee scheme, announced earlier this month, has done little to build confidence. The sell-off, which kicked off in the US last night where the Dow Jones lost 126 points, continued in Asia Tuesday morning, leaving Far East markets down over 3%.