London - AFP
European shares sank on Monday, Spanish bond yields spiked to danger levels above 7.0 percent and the euro languished at a two-year low point in volatile deals before a key eurozone finance meeting. Madrid\'s benchmark IBEX 35 index of leading shares tumbled 1.71 percent to 6,623.90 points and Rome\'s FTSE Mib shed 0.82 percent to 13,622.29, as investors fretted over fresh turmoil for Italian and Spanish bonds. London\'s FTSE 100 index meanwhile slid 0.38 percent to 5,641.10 points in morning trade, Frankfurt\'s DAX 30 shed 0.21 percent to 6,396.76 points and in Paris the CAC 40 lost 0.57 percent to 3,150.84. Investor sentiment in Asia and Europe was also dented by Friday\'s weak US jobs data that raised fresh concerns about the world\'s biggest economy. Later on Monday, at 1600 GMT, eurozone finance ministers meet under pressure to push ahead quickly with measures agreed last month to tackle the region\'s sovereign debt crisis, as market sentiment turns increasingly negative. Investors remain highly anxious that the eurozone debt crisis, which has already sunk Ireland, Greece and Portugal, could spread to Spain and Italy. In a gloomy omen, the price Spain must pay to borrow for 10 years rose sharply to 7.026 percent on Monday, from 6.912 percent late on Friday. And the European single currency dived to $1.2251 in earlier Asian trade, hitting the lowest point since July 1, 2010. It stood at $1.2281. \"Eurozone finance ministers meet in Brussels, ostensibly to build on the decisions announced at the summit two weeks ago,\" said IG Index analyst Chris Beauchamp. \"As if to underline the urgency of their discussions, yields for Spanish and Italian bonds are on the march again, although this latest meeting is likely to end with a statement of intent but little else.\" European leaders had hailed a June 28-29 EU summit as a breakthrough, promising fresh capital for Spain\'s struggling banks, a European bank union to keep the lenders in line and making it easier for the bloc\'s new bailout fund to help states in trouble. But after an initially euphoric response, investors have switched tack, pushing Spanish long-term borrowing costs back up to the kind of sky-high rate which forced Greece, Ireland and Portugal into massive EU-IMF bailout deals. \"Ministers will meet today in Brussels and high on the agenda will be clarifying in some degree the details of what was agreed at the EU leaders\' summit at the end of June,\" said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi UFJ in London. \"The initial response was positive, but a lack of detail has resulted in confidence ebbing away and yields in Spain and Italy are at or higher than (levels) before the summit. \"It is clear to us that the primary driver of the contraction in yields was the part of the EU statement that implied imminent purchases of Spanish and/or Italian bonds in the secondary market. \"When that didn\'t materialise and when the ECB failed to re-activate the SMP (Securities Markets Programme) last Thursday, then yields plunged.\" Responding to the turn of events, Spanish Prime Minister Mariano Rajoy announced on Saturday that Madrid would take additional steps soon to cut its public deficit and called for progress on the summit measures. \"What will really determine their success is that they turn into concrete realities, in a supple, quick and effective way,\" Rajoy said, adding: \"Europe must fulfill the accords as swiftly as possible.\" French Finance Minister Pierre Moscovici said Monday\'s meeting will \"translate into action\" the summit decisions but added that there would be another gathering \"in July, on July 20 I think.\" As the positive gloss on the June 28-29 summit wears thin, International Monetary Fund chief Christine Lagarde warned Friday that the global economy was slowing because Europe is not doing enough to fix the debt crisis. In China on Monday, meanwhile, data showing the rate of inflation slowed in June opened the door to new government action to boost growth. However, the news failed to lift markets amid fears that indicators later this week will show more evidence of a slowdown. Hong Kong closed 1.88 percent lower, Shanghai dived 2.37 percent and Tokyo lost 1.37 percent in value. Japanese shares were hit by poor domestic data. The US economy added only 80,000 jobs, well below expectations, leaving the unemployment rate at 8.2 percent, according to data released on Friday.