14.10 Commenting on the ban, Mark Foulds, head of spreadbetting sales at ETX Capital, told Reuters:
The ban will cause a little bit more uncertainty in the market: the ban extends on shares and indices, including cash operating and derivatives, and is due to volatility. It is sheer lack of confidence out there.
13.37 Spain has also imposed a short selling ban on all stocks. The ban will initially last for three months, the country's market regulator said.
13.18 The short-selling of financial stocks in Italy has been banned by regulators following this morning's sell-off.
Italian market regulator Consob said in a statement:
Given the recent turn of events on the market, Consob has decided to reintroduce the ban on short-selling stocks in the banking and insurance-company sectors.
Consob first imposed a ban last August, which continued until February this year.
13.06 Italian schools may not be able to open after the summer break if a latest round of spending cuts is implemented, according to body that represents Italian provinces.
Giuseppe Castiglione, the president of the Union of Italian Provinces (UPI) said:
With these cuts we won't be able to guarantee the opening of the school year.
12.09 So how long can Spain fund itself at interest rates of 7.5pc?
Think tank Open Europe thinks the real problems will arise in 2015, when the country has to refinance debt worth more than half its GDP. More from Open Europe:
By all accounts Spain has done well to ?pre-fund? a large amount of its debt this year (meaning its already borrowed most of the money it needs to), while the average interest rate on its debt remains fairly low (around 4%) while the average maturity of its debt is around six and a half years ? in all not a bad debt profile considering everything. However, around 10% is soon to be added to the debt to GDP ratio while the mounting costs of bailing out the Spanish regions will only exacerbate this. [?] looking at the Spanish state?s funding needs over the next few years, even with the recapitalisation of the banks taken care of, it faces a huge level of debt refinancing. Up to mid-2015 Spain faces funding needs of ?547.5bn, over half its GDP and a large majority of its debt.
The Spanish central government will need to rollover ?209bn in bonds and ?75bn in bills, equal to almost 30% of GDP and close to half of its official debt. This will become increasingly difficult if Spanish borrowing costs remain at elevated levels.
11.50 Greece will not receive its next bail-out tranche until September at the earliest, the European Commission has reiterated.
A spokesman said:
The decision on the next disbursement will only be taken once the ongoing review is completed [...] over the last few months, significant delays in programme implementation have occured due to the double parliamentary elections in the spring.
Two Greek government bonds totalling ?3.1bn will mature on August 20.
The delay means Athens could be forced to raise money on the debt markets to repay them - at a very high cost.
11.20 Another record. German 10-year bond yields are now at a record low of 1.126pc. Earlier today, the country sold 12 month debt at average yields of -0.054pc.
11.08 Trading has been suspended in several stocks on the Milan stock exchange. Trader "Eloi Eloi" tweets:
11.01 The pain in Spain is spreading to Italy. Italian daily La Stampa is reporting that ten Italian regions, including Campania and Sicily, are facing trouble with their finances.
Citing government sources, the Italian daily said that big holes had been revealed in municipal accounts and that "at least 10 big cities" faced problems.
Last week, Sicily's mayor, Leoluca Orlando, said Italy's economic crisis risked sparking 'civil war' in Sicily.
10.40 Europe's crisis may have cranked up another notch, but as our international business editor Ambrose Evans-Pritchard pointed out to me this morning, one country we should be worried about is China.
China's benchmark index fell to its lowest level in more than three years today, after a member of its monetary policy committee said that economic growth will slow this quarter.
Song Guoqing said China?s economic growth may cool to 7.4pc. He said:
The consensus is that China?s economic growth rate will be close to 8pc in the coming months, but I personally am more pessimistic because there are problems on the export side.
The Shanghai Composite index fell 1.3pc to 2,141.40.
10.25 Forget Spain's ten-year borrowing costs. Two-year debt yields in Spain - at 6.74pc - are also headed towards 7pc danger levels.
Compare this with the borrowing costs of Switzerland, Denmark, Germany and Finland, which are currently borrowing at negative rates. This means investors are willing to pay to hold the debt of these countries.
10.12 Read what you will out of this:
Spain's Economy Minister Luis de Guindos has told Reuters that the country will "absolutely not" need a full scale bail-out. Spain has already been granted up to ?100bn in aid for its battered banks.
09.49 Back to Spain, where the economy posted a 0.4pc contraction in the second quarter, a sharper fall than the 0.3pc contraction recorded in the first three months of the year, according to the Bank of Spain.
09.42 More harsh language from the Germans this morning. German MP Alexander Dobrindt has called for Greece to start paying half of its pensions and state salaries in drachmas as part of a gradual exit from the eurozone. He told Die Welt:
With Greece we have reached the end of the road. There must not be any further aid. A country which does not have the will to fulfil the conditions, or is not able to do so, must get a chance outside the euro.
Mr Dobrindt has long called for Greece to exit the euro.
Back to the drachma? German MP Alexander Dobrindt has called for Greece to start paying half of its pensions and state salaries in drachmas as part of a gradual exit from the eurozone (Photo: AP)
09.32 The Athens Stock Exchange has fallen by 2.7pc this morning. Simon Denham at Capital Spreads comments:
This realisation that you are probably better off simply putting the money on a large bonfire as opposed to giving it to the Greek government is a signal that there is little faith in country being able to meet its debt target by 2020. With the IMF saying enough is enough the EU is going to have to fill the hole at a time when its resources are already being stretched to the limit by Spain requesting ?100 billion only recently. Needless to say the yields on the country?s ten year bond spiked to a record high causing a sell off of all risk assets and in particular a pummelling for the single currency.
A major worry now of course is whether Italy will be next as its bond yields continue to slide down their slippery slope. This is such an unknown as far as the amount of funds the country would need in respect of a bailout as its crippling debts and the size of its economy dwarf those of the periphery. Italy is a G6 country with liabilities that stretch across the globe.
09.20 Let's not forget where this all started - in Greece. Yesterday, German Vice Chancellor Philipp Roesler repeated the EU ultimatum to the debt-laden country: no austerity = no bail-out cash.
In remarkably frank language, Mr Roesler said he was "very sceptical" that European leaders would be able to save Greece. He told German broadcaster ARD:
What?s emerging is that Greece will probably not be able to fulfil its conditions, [...] What is clear: if Greece doesn?t fulfil those conditions, then there can be no more payments.
09.16 The protests in Spain have attracted high profile support. Here's actor Javier Bardem joining protests last Thursday. The No Country for Old Men star marched under a banner which read, "Culture is not a luxury".
Spanish actor Javier Bardem and his brother Carlos applaud as they attend a protest against government austerity measures in Madrid last week. The placard reads, "Our cuts will be with a guillotine" (Photo: Reuters).
09.06 Conservative MP John Redwood offers his two-pence on the Spanish crisis in a blog this morning:
Last week the whole argument over keeping the Spanish state safe from banking excess was overwhelmed by the news that Valencia needs help. Catalonia, Murcia and others may also in due course want similar assistance. The Spanish provinces have devolved responsibility for big spending areas like health and education as well as more traditional devolved matters in a European federal EU member. As a result the federal government?s austerity packages, demanded by the Euro bosses, of necessity demand substantial cuts in regional spending as well as in federal government spending. There is little love lost between the main regions and the centre. There is even less when the national government demands cuts. Some of the cuts are proving too painful or difficult. As a result the regions are now asking for some relaxation of the discipline, and at the same time saying they need help from central government to borrow the money they need.
09.02 Spain approved measures this month allowing larger shops to open for 25pc longer a week. This from Bloomberg:
The new rules may encourage the outlets to sell during the traditional afternoon snooze from 2pm to 4pm, and on an additional two Sundays or holidays a year for a total of ten.
?When everything was fine, nobody complained, but now that things have gone awry, then it?s another story,? said Carmen Cardeno, director general for domestic commerce at the nation?s economy ministry, which created the rules. ?We need to evolve and be more flexible.?
08.59 Another victim of the debt crisis has emerged this morning:
08.45 On Friday, Valencia became the first Spanish region to seek a bail-out from a new fund setup by the Spanish central government, which is itself under heavy financial strain.
Later that evening, El Pais reported that six more regions had joined the bail-out queue - Catalonia, Castilla-La Mancha, Baleares, Murcia, the Canary Islands and Andalusia.
On Sunday, the head of the local government in Murcia said in an interview that the region would be the second to make a formal request for aid.
Ramon Luis Valcarcel said that he hoped that the cash injection would be available for September.
This morning, business daily El Confidencial reports that Catalonia will request ?3.5bn from the bail-out pot.
And here we are today...
The yield on 10-year Spanish government bonds hit 7.53pc this morning - a euro-era high.
Meanwhile, for the first time since the beginning of 2009, it now costs Italy more to borrow than it does Ireland (6.348pc v 6.2797pc).
08.31 Stock markets have tumbled this morning on the back of reports over the weekend that several Spanish regions are lining up with their begging bowls to tap a special ?18bn funding pot designed to help struggling regions meet commitments.
08.30 Good morning and welcome back to our live coverage of the European debt crisis.
Debt crisis live: archive
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