Osborne criticises Spain bailout

George Osborne has said the failure of the Spanish bank bailout is "depressing" as the banks had to be directly recapitalised into to convince the markets of its credibility. Spain's borrowing costs have hit the highest level for 13 years.

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Spanish bailout is a 'temporary solution' only

JP Morgan Global Strategist Tom Elliot says the Spanish bailout is a temporary solution that is "useful" but not long-term. Mr Elliot says the bailout has stopped a fully blown "systemic European banking collapse" that limits the risk of contagion.

Mr Elliot says the bailout is like "two drunks propping each other up": it is not sustainable and the collapse of one must be engineered.

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Greece to 'seek better bailout terms'

Greece can seek a better deal from Europe for its own rescue after Spain won lenient bailout Credit: Reuters

The main political parties of Greece have agreed that Greece should seek a better deal from Europe for its own rescue after Spain won such 'lenient' bailout terms.

Athens News is reporting that Syriza, set to become the main political party after the June 17 elections, said the Spanish deal proved that austerity imposed by international lenders had failed. Syriza spokesman Panos Skourletis said:

"Developments in Spain fully vindicate us in our reading of the crisis: this is a deep structural crisis of the eurozone itself. The discussions in Europe open new perspectives for Greece and the euro zone."

Germany forced to defend Spanish bailout

German Chancellor Angela Merkel was forced to defend the European rescue plan for Spain's indebted banks, as many German citizens are convinced their generosity is being abused.

Opinion polls show the German public are growing tired of their country's role as paymaster in the euro zone debt crisis.

Merkel's spokesman Steffan Seibert defended the bailout saying:

The Spanish application comes from the state, the money will go to the state, the state is liable and the state takes on the responsibility for the stipulated conditions.

It sends a good signal to the markets and Europe's partners that Europe is capable of acting and now has the instruments at its disposal to deal with crisis events that it did not have two or three years ago."

Cyprus may seek a bailout

Eurozone member Cyprus has strongly hinted it may have to apply for an international bailout before the end of June.

Finance Minister Vassos Shiarly said: "The issue is urgent. We know the recapitalisation of the (island's) banks must be completed by June 30, and there are a few days left".

Cyprus is under growing pressure to apply for aid to salvage its second-largest lender Cyprus Popular Bank, bowed by its exposure to debt-crippled Greece.

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European markets expected to surge today

European markets are expected to surge today after eurozone finance ministers agreed to lend Spain up to $125 billion to help its battered banks.

Financial spreadbetters predicted the following:

  • Britain's FTSE 100 to open about 99 points higher, or 1.8 percent.
  • Germany's DAX to jump 159-161 points, or as much as 2.6 percent.
  • France's CAC-40 to climb 60 to 64 points, or as much as 2.1 percent.

But investors are expected to remain cautious with the focus set to shift to Greece's re-run election on June 17 which could determine whether the country stays or leaves the eurozone.

Euro jump as EU aids Spanish banks

Euro
The euro jumped this morning after euro zone finance ministers agreed to lend Spain up to $125 billion Credit: Barry Batchelor / PA

Shares, commodities and the battered euro jumped this morning after euro zone finance ministers agreed to lend Spain up to $125 billion to shore up its struggling banks, relieving markets that had feared for the country's fiscal collapse.

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