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Greece, Spain concerns rattle markets

Monday, May 21, 2012 - 02:19

May 21 - European shares briefly hit five-month lows on Monday morning. Although they rebounded slightly, investors remain concerned about the ability of Greece and Spain to deal with their debt problems. Joanna Partridge reports

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A new trading week - and the euro zone crisis hasn't moved far from investors' minds. European shares briefly fell to their lowest level in five months on Monday morning due to concerns about how Greece and Spain can deal with their debt problems. But stocks soon bounced back to recoup some of their losses. Traders remain cautious. SOUNDBITE: Robert Halver, Baader Bank, saying (English): "We still have the big picture, a bad picture concerning the European crisis and eurobonds." Adding to worries about Greece's debt - the situation in Spain is now taking centre stage. Spain's Economy Minister Luis de Guindos says they will meet this year's deficit targets. Madrid aims to cut its deficit to 5.3% of GDP this year, from 8.9% in 2011. That's despite the government's estimate that the economy is still shrinking. SOUNDBITE: Luis de Guindos, Spanish Economy Minister, saying (Spanish): "In almost the middle of last year, Spain's economy entered a profound slowdown. If you'll allow me the expression, it's in an accelerated slow-down. Following a third quarter of practically zero growth, 4 quarters of negative growth, the first quarter of the year was similar. And according to independent indicators we are seeing much the same in the second quarter." A deepening of Spain's recession will only put more pressure on Madrid. As it is, the Spanish economy is suffering from doubts that it can rein in its finances and get its struggling banking sector on the road back to health. Spain still says it will not need external help. In recent weeks, the discussions in Europe have intensified about how to focus more on growth not austerity. G8 leaders meeting in the United States over the weekend also gave their backing for measures that will stimulate job creation and growth. But analysts say there's no sign that Germany has softened its stance on austerity, which it views as the cure for Europe's debt problems. And with no new consensus from Europe, markets are expected to remain cautious about the risk of a chaotic Greek exit from the euro - and the massive upheaval that would bring for the region's banking sector and the global economy. Joanna Partridge, Reuters

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Greece, Spain concerns rattle markets

Monday, May 21, 2012 - 02:19