Party-pooping Merkel puts damper on financial markets

German Chancellor Angela Merkel's persistent objections to the issue of eurobonds and a greater role for the European Central Bank in resolving the euro-zone sovereign debt crisis spoiled what promised to be a more positive day for the financial markets in Spain and the rest of Europe.

At a mini-summit in Strasbourg with French President Nicolas Sarkozy and Italian Prime Minister Mario Monti, the German leader insisted that the only way to resolve the crisis was through greater fiscal union in Europe.

After having improved at one point by more than 20 basis points, Spain's risk premium by the close of the session was down by only 6 basis points, at 443 basis points.

The Spanish blue-chip Ibex 35 index closed down 0.23 percent at 7,721.80 points after having rising to as high as 7,877.10 points during the session.