EU extends Spain 30-bn-euro lifeline
Euro zone finance ministers claimed new progress in fighting the debt crisis on Tuesday, saying measures agreed to help Spain and its stricken banks put in place plenty of firepower.business Updated: Jul 10, 2012 21:32 IST
Euro zone finance ministers claimed new progress in fighting the debt crisis on Tuesday, saying measures agreed to help Spain and its stricken banks put in place plenty of firepower.
With Spain under pressure on the financial markets, euro zone finance ministers approved plans overnight to provide €30 billion ($37 billion) for its banks this month, with €100 billion ($123 billion) potentially available in all.
After nine hours of talks, Jean-Claude Juncker, the Luxembourg premier who also heads the Eurogroup, said a memorandum of understanding for Spain would be formally signed “in the second half of July,” available by the end of the month.
At the same time, the 17-nation single currency bloc agreed to extend a deadline for Spain to cut its public deficit to the EU’s 3.0% limit by one year to 2014 because of the difficult economic conditions it faces.
The euro zone bond market had come under acute pressure on Monday when Spanish and Italian bond rates rose sharply and German and French rates fell, on scepticism that the Eurogroup meeting of finance ministers would amount to much.
“The markets have to realise that the money is there, more than they realise,” said Luxembourg finance minister Luc Frieden as he went into the meeting of all 27 EU finance ministers.
Spanish economy minister Luis de Guindos said the “two agreements are very positive,” giving Madrid the time and the money “to thoroughly clear up the banking sector.”
European shares ended four straight sessions of losses, inching up 0.2% to 1032.12 points led by banks, after the deal. Key benchmark indices in France, Germany and UK were trading higher in the 0.7-1.2% range.