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Euro zone unrest deepens Spain's plight

Wednesday, September 26, 2012 - 01:59

Sept. 26 - Violent protests in Greece and Spain and snap elections in one Spanish region increase the pressure on Spain to ask for a bailout. Ciara Sutton reports.

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Police on the streets of Athens battle to control violent protests against further budget cuts. It's the first general strike this coalition government has had to face and it wasn't an easy challenge. Flights were cancelled and it was emergencies only at hospitals. International lenders are also reportedly clashing over how to solve Athens' problems - the IMF wants European governments to write off some more Greek debt. ACTUALITY The unrest was mirrored on the streets of Spain, which remains firmly in the debt crisis spotlight. Prime Minister Mariano Rajoy has been reluctant to request a bailout just to ease the crisis for others. But he has now moved one step closer, reportedly saying he will if Spanish debt costs remain high. Spaniards have a new budget to swallow first though - and it's not looking very palatable. Rajoy needs to persuade investors that Spain is doing its upmost to cut its deficit - despite high unemployment and recession. Tobias Blattner is from Daiwa Capital Markets. (SOUNDBITE) (English) TOBIAS BLATTNER, ECONOMIST AT DAIWA CAPITAL MARKETS: "I think there is all this room for disappointment and we just see that governments are not living up to the expectations and not implementing what they promised, and I think this is also another blow to the credibility of euro area politicians and it clearly has the potential to change the market sentiment in due course." The government of the major Catalan region has also added to Rajoy's woes by calling a snap election which could jeopardize his reform plans. There are also reports he's under new pressures from euro zone policymakers. Shares around the world fell and the euro hit a two-week low as these scenes unnerved investors already worried about weak global growth. Ciara Sutton, Reuters

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Euro zone unrest deepens Spain's plight

Wednesday, September 26, 2012 - 01:59