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Euro debt costs raise contagion alarm

Thursday, November 17, 2011 - 01:46

Nov. 17 - The results of Spanish and French government debt auctions cause concern, as borrowing costs for those governments continue to rise. Kirsty Basset reports.

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There's renewed turmoil on European bond markets, following disappointing auctions of Spanish and French debt. Spain was forced to pay the highest rate in fourteen years. ETX Capital market analyst Manoj Ladwa. (SOUNDBITE)(English) ETX CAPITAL MARKET ANALYST MANOJ LADWA SAYING: "The ten year bonds went out at just under 7 per cent which isn't good and doesn't reflect well on Spain." France also held a bond sale - its cost of borrowing over 2 and 4 years jumped half a per cent, showing the country's increasing vulnerability to euro zone debt worries. The results came despite attempts by the European Central Bank earlier in the week to ease pressure on debt stricken states, by intervening in bond markets. (SOUNDBITE)(English) ETX CAPITAL MARKET ANALYST MANOJ LADWA SAYING: "The yields on these bonds continues to go up. The price continues to come down for these bonds. And if the ECB is not able to step into the market and buy enough the worst case scenario is going to happen, and those bond yields are going to carry on moving higher and higher as we're seeing in the last few days or so." The ECB's role in diffusing the crisis has split France and Germany. France wants the bank to play a larger role, Germany Chancellor Angela Merkel has again voiced her opposition. (SOUNDBITE) (German) GERMAN CHANCELLOR, ANGELA MERKEL, SAYING: "If politicians think the ECB can solve the euro crisis, then they are mistaken. That's why my main point is political action." The gap between Spanish and French bonds compared to Germany's hit fresh euro highs on Thursday. Germany is increasingly seen as the only safehaven in the euro zone. Kirsty Basset, Reuters.

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Euro debt costs raise contagion alarm

Thursday, November 17, 2011 - 01:46