European Stock Markets Became A Sea Of Red Today As Traders Fretted With Regards To The State Of Ass

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European stock markets became a sea of red today as traders fretted regarding the state of several eurozone economies and the dreaded word "contagion" was bandied around dealing rooms all over the continent.

Spain was particularly badly hit. Investors doubt whether the government will honour its pledge to cut its budget deficit and question whether its faltering economical growth are going to be enough to sustain debt payments. The Ibex index of Spain's most to a considerable degree swapped stocks plunged by 3%, more than other European indexes, as the Spanish treasury was forced to offer investors a more suitable return to get the sale of a fresh tranche of government bonds away.

Spain sold €2bn (£1. 7bn) of six-month bills, paying an interest rate of 1. 2%. Just last month the rate was 0. 7%, showing how rapidly worries regarding Spain's ability to cope with its deficit have ballooned.

The country is at the centre of the storm after its central bank seized control of CajaSur, a little, southern savings bank hit by the property collapse.

"CajaSur's seizure by the Bank of Spain over the weekend, ...
... altho of no systemic importance, has highlighted Spain's collapsing property market and the magnification of the banking strategy to the ailing domestic economy," said Gavan Nolan, a credit analyst at Markit. "But it served as a reminder than the results of Spain's bubble economy bursting have still to be played out, and other savings banks are anticipated to run into troubles. "

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