FTSE slumps amid Spanish debt fears

Mon, 23rd Jul 2012

The top share index in the UK started the week with a sharp fall after fears about the Spanish economy dominated global markets. By the end of the session, the FTSE 100 was close to a one month low, shedding 2.09 per cent to finish at 5534.

After getting a deal for its banking bail-out agreed, Spain is now facing the possibility that it may have to ask for a full rescue deal after two of its regions asked for emergency cash. Both Valencia and Murcia are being reported as close to bankruptcy and have requested money from central government and some sources have suggested that Catalonia and several others are about to follow suit. With Spain already in severe financial difficulty, the country simply does not have the resources to bail out its individual regions and may be forced to return to the EU for more cash.Elsewhere in Europe, the EU has been told by the International Monetary Fund that no further cash will be made available for Greece, triggering concerns once again that the country will resort to defaulting.The downbeat sentiment hit stocks right across the board on the FTSE 100, with no high flyers on Monday. At the bottom of the table was steel producer Evraz, down by 5.95 per cent after Morgan Stanley publicly disagreed with their forecasts for 2016, suggesting that the firm was using inflated prices upon which to base their calculations. Aviva and Hargreaves Lansdown were also lower due to their exposure to global stock markets.
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