Spanish 10-year bond yields rose above 7 percent for the first time since the euro’s creation as a jump in bad loans fueled concern the debt crisis is deepening. Stocks and the euro fell, erasing gains triggered when Greek pro-bailout parties won enough seats to form a government.
The 10-year Spanish yield jumped 32 basis points to 7.19 percent at 9:31 a.m. in New York. The Standard & Poor’s 500 Index lost 0.3 percent and the Stoxx Europe 600 Index slipped 0.2 percent after earlier rallying 1.1 percent. The euro depreciated 0.4 percent to $1.2593 after rising as much as 0.9 percent. Egyptian stocks headed for a bear market after the military curtailed powers of the elected president.
Any relief following the Greek election results should be brief,”Ciaran O’Hagan, head of interest-rate strategy at Societe Generale SA in Paris, wrote today in an e-mailed note. “At best, we are facing a muddle-through scenario in Greece. The focus now returns to Spain, where the latest developments continue to trouble us.”
Bad loans as a proportion of total Spanish lending jumped to 8.72 percent in April, the highest since 1994, from 8.37 percent in March, the Bank of Spain said on its website today. Greece’s New Democracy and Pasok parties won enough seats to form a majority in the 300-member parliament, according to the parliament’s speaker, easing concern that Greece would reject austerity measures needed to qualify for aid.
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