Financial markets under pressure ahead of key meeting

The yield on the Spanish benchmark 10-year government bond remained above the critical seven-percent level on Monday while the risk premium hovered close to euro-era highs ahead of a meeting of euro-zone economy and finance ministers to decide details of the bailout package for Spain’s banking sector.

The ongoing siege of the Spanish debt market prompted renewed pleas by Foreign Minister José Manuel García-Margallo for “massive” intervention by the European Central Bank to prop up Spanish government bonds in the secondary market and let “speculators understand that if they are going to bet against the euro, they are going to lose.”

The yield on the benchmark bond was at 7.065 percent in late trading, while the risk premium stood at 574 basis points after hitting a high of over 580 earlier in the session. The blue-chip Ibex 35 index was down 0.91 percent at 6,670.60 points after recovering from an intraday low of 6,611.60 points.

García-Margallo railed against “blind forces” operating in the markets aiming to maximize their profits, but added “the responsibility is not so much that of the markets but that of the European institutions that need to carry out the necessary measures to prevent attacks on the euro being successful.”

The Eurogroup is likely to demand Spanish banks maintain a core capital ratio of NINE percent in exchange for a bailout of up to 100 million euros.