Stocks take heavy beating as banks remain cause for concern

Doubting Thomases in the investment community continued to lay siege to all things Spanish on Wednesday as the blue-chip Ibex 35 at one point in the session fell to levels last seen on October 2003, before a late partial recovery left the market at the lowest levels of 2009, when the country was in the grip of its deepest recession in living memory.

The benchmark index eventually closed down 2.55 percent at 6,831.90 points after an intraday low of 6,776.50 points. The extent to which Spain has been singled out was evident from the performance of the other major European bourses. The CAC 40 in Paris added 0.42 percent, while the DAX in Frankfurt fell 0.75 percent.

The IBEX has now lost just over a fifth of its value since the start of this year, making it the worst-performing stock market in Europe.

The banks felt the brunt of the sell-off ahead of the outcome of a meeting of European finance ministers in Brussels on the sector’s capitalization needs. Bankia shed 5.13 percent, Santander was down 3.31 percent, while BBVA declined 3.33 percent.

Electricity grid operator Red Eléctrica de España shed 2.23 percent after Bolivia nationalized its Transportadora de Eléctricidad unit.

One company that managed to buck the trend was Abengoa, which gained 7.19 percent after it announced it had successfully refinanced a 1.566-billion-euro syndicated loan.

In the sovereign debt market, the spread between the yield on the Spanish benchmark 10-year government bond and the German equivalent widened 13 basis points to 424 basis points.