Relief over plans to rescue Spain’s beleaguered banks with up to €100 billion (£81bn) of EU funds drove world markets higher this morning.
Financial stocks were the major beneficiaries as the move to recapitalise the country’s banking system appeared to avert immediate fears of another global credit crunch.
The FTSE 100 Index had rallied about 1.3 per cent shortly after opening, in line with Asia and other European markets, while the single currency was 1 per cent higher against the US dollar.
David Simner, portfolio manager at Fidelity’s Euro Bond Fund, said the Spanish bank bailout was seen as a positive for several reasons.
“It will enforce the long-awaited external scrutiny of Spain’s banks,” he said. “This will remove a significant element of economic uncertainty once a final clean-up cost is arrived at.
“The funding will be provided at below-market rates and, we assume, long maturities, which takes the heat off Spain’s regular sovereign issuance.
“It is a signal of intent by Eurozone powers that they want to stop the rot by pre-emptively deploying firewall resources.”
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Monday 20 May 2013
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