Global stocks took another pounding on Tuesday, while borrowing costs for Spain and Italy spiked as investors worried that Europe’s debt crisis could infect the continent’s larger economies.
The premiums demanded by investors to lend to Rome and Madrid have soared, as the lack of a clear plan for Greece and the growing spectre that it might be allowed to temporarily default has put the eurozone's third- and fourth-largest economies in the spotlight.
Italy's shares rebounded on Tuesday when finance minister Giulio Tremonti announced plans to accelerate the country's austerity measures.
Italy’s foreign minister Franco Frattini has lashed out at the financial attack on his country. “It’s a purely speculative attack because our banks are doing better... we haven't had a Spanish property bubble or an Irish financial bubble and we don't have Greece’s public finances," Frattini said.