Spain's Ibex 35 index and the rest of the international stock markets on Monday extended their recent dire run as fears that Greece would default on its debt and be suspended from the euro zone continued to gather strength.
The Spanish blue-chip Ibex 35 fell to its lowest level in some 30 months, while Spain's risk premium also reached its highest level since the European Central Bank (ECB) started to buy Spanish and Italian government bonds in the secondary market in early August.
The Greek government's announcement on Sunday of yet more belt-tightening measures to convince the markets of its ability to service its debt fell on deaf ears as share values plummeted.
Athens also revealed it had only enough funding to pay pensions and public-sector wages until October, making the receipt of the sixth tranche of the 110-billion-euro bailout package agreed last year vital.
The European Commission flatly rejected the idea it was working on a scenario of a possible Greek default. European finance ministers are still at loggerheads over a second bailout package for Greece.
That heightened a sense of policy disarray underscored by the shock resignation of the ECB's chief economist, Jürgen Stark, in disagreement with bank's bond purchasing program. That had caused the markets to plunge on Friday.
The Ibex 35 closed Monday down 3.41 percent at 7,640.70 points, its lowest level since the end of March 2009. Wall Street's opening helped reduce the loss to under two percent but that proved short-lived. The benchmark index is now down 22.5 percent since the start of the year.
In the rest of Europe, Frankfurt's DAX gave up 2.27 percent, while the CAC 40 in Paris was off 4.03 percent over concerns about French banks' exposure to Greek sovereign debt. The Euro Stoxx 50 gave up 3.79 percent. The PSI-20 in Lisbon was down 4.19 percent.
The spread between the yield on the Spanish benchmark 10-year government bond and the German equivalent widened by almost 20 basis points to over 350 basis points.