Senin, 11 Juni 2012

Shares and euro boosted by massive bailout for Spanish banks

Shares and euro boosted by massive bailout for Spanish banks

By Adrian Lowery Rupert Steiner

PUBLISHED: 16:07 EST, 10 June 2012 | UPDATED: 05:13 EST, 11 June 2012

Stock markets across Europe bounced back in early trading today after Spain managed to secure European Union aid for its stricken banks.

The FTSE 100 index rose 1.8 per cent on the open but fell back through the morning to stand 60.6 points or 1 per cent up at 5,495.6.

The Dax in Frankfurt and Cac 40 in Paris both remained 2 per cent to the better, and the Ibex in Madrid was 3.2 per cent higher, while overnight the Nikkei in Tokyo closed up 2.0 per cent. Meanwhile, the euro gained more than one cent against the US dollar, taking it to $1.267.

Enlarge   Bailout: Markets are expected to bounce back following the new arrangements, but the relief could be short lived as there will be concerns over the implications for the rest of Europe

Bailout: Markets are expected to bounce back following the new arrangements, but the relief could be short lived as there will be concerns over the implications for the rest of Europe

Eurozone finance ministers agreed to lend Spain as much as £80billion to recapitalise its banking sector â€" almost double what most were expecting.

The 17-nation currency area agreed to lend Madrid the cash to shore up a raft of regional banks that were left exposed by the property crash. Details of the move have yet to be ironed out â€" much will depend on the results of specific audits.

Financial stocks were among the major beneficiaries in London, with Barclays and insurer Aviva benefiting. International Airlines Group, which owns British Airways and Spain's Iberia, also jumped.

The next key date for the euro crisis is Sunday when Greece holds an election that is being seen as a referendum on whether to stay in the eurozone or reject painful austerity measures.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: 'The Spanish announcement is not a solution to the eurozone's ongoing woes, but it is a statement of intent.

'Despite the fact that details have to date been sketchy on the ultimate resolution of the European crisis, one constant has been a declaration by the authorities that the area will remain intact.

'Some much-needed time has now been bought in Spain, which will allow the market an at least temporary sigh of relief.'

Other experts empasised that the the relief could be short lived once the true cost sinks in.

Vicky Pryce, an independent economic analyst and former government adviser, said: ‘There will be relief, at least the banking crisis has been averted â€" but concern over the implications for rest of Europe, and Spain’s ability to borrow.’

Spain has managed to avoid the austerity measures hoisted on Greece after its two bailouts by arguing the cash will be used specifically to rescue its banks.

It entered the downturn with one of the lowest debt levels of any country. Its finance minister Luis de Guindos, said the aid should not be construed as a rescue.

He explained: ‘It’s a loan with very favourable conditions.’

Olli Rehn, Europe’s Economic and Monetary Affairs Commissioner, was reported as saying: ‘I am confident this will send a strong signal to the markets that the euro area is ready to support Spain in its efforts to restructure and recapitalise its banking sector.’

It appears Spain was strong-armed into in an EU-funded rescue to pre-empt the threat of a run on its banks if Greece’s debt crisis flares again.

Pryce said market reaction is likely to be mixed: ‘On the one hand there will be relief some arrangements have been made.

‘The rescue means Spain’s ratio of debt to GDP will increase because the money it is getting will be added to the debt â€" so there would be concerns about their sovereign risk.

‘They would still find it difficult to borrow in the markets and there is likely to be further downgrades.’

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Not to worry ... somebody had to pay for all those finished and unfinished apartment blocks in Spain where the unemployed are squatting, unable to pay their mortgages. Shame they can't print some Euros and we could all live happily ever after on funny-money, zero interest rates and hyper-inflation.

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This is just massive ponzi scheme that the ordinary tax payers will be forced to pay in the future...There is no way on this earth that Greece, Ireland Spain et all can ever repay these 'debts'..The criminal people running this need be locked up in an asylem for the rest of their days..

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The Champagne corks will be popping iin the Spanish Banks.... Then it will straight into the hard work of deciding the size of the Bonus pool.

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Oh goodie, they must be rubbing their hands with glee, another 80 billion to leverage up to trillions on derivatives!

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Another short-term fix allowing the markets to make some money at taxpayers' expense, while preparing to bale out again at a moment's notice, leaving the said taxpayers with even more debt. What a farce.

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when will people start too realise , its not the banks that caused the problems, it was the socialist governments when in power spending our money for their air brain cause of benefits for all,. Spain and greece both examples of mis management by so called socialists.. and the Uk had 10 years of gordon ( no more boom and bust ) brown. They allowed the banks too do this, and its about time they stopped lying

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All this borrowing must stop. Full stop!

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So let me try to understand this. Spain is broke. They borrow 80 billion Euros. Everyone rejoices. Dont tell me its just the banks. Who the hell do you think is going to fund this lot, their taxpayers.Spain is broke. But never mind they have just gone deeper into debt and everyones happy. Nope I still dont get it. Maybe when it happens to Italy next someone will explain it.

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A month or so back they were throwing half a trillion at the problem and it failed so what is a miserly 100 billion going to do?

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When the UK housing market finaly realises it has collapsed how much will England deserve for it's banks? 2 trillion maybe? Well done those banks for allowing massive house price inflation. I thought the whole point in insisting on a survey is so that the bank only lends what a property is worth, so it all went wrong somewhere along the line due to people being greedy. Meanwhile all the houses peole walk away from belong to the banks who will hang on to them until the next ramp-up in prices. If the banks are getting massive loans then they should give the properties over in exchange and those properties used as affordable homes but I bet that won't happen, and the banks will not sell them off cheaply for fear of undercutting the market like in America.

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