Ibex 35 falters on doubts over banks and crisis in Portugal

Wednesday was a day of losses for European markets, which nevertheless managed a late rally toward the end of the trading session. The Spanish blue-chip Ibex 35 closed down 1.56 percent to end on 7,763 points after shedding nearly 3 percent of its value by mid-session. The index was dragged down chiefly by bank shares due to renewed concern over the worth of Spain’s bailed-out lenders.

Meanwhile, the political crisis in Portugal, which saw its risk premium shoot up by more than 120 points in just one hour, made itself felt in Spain where the spread between the interest investors demand to hold Spanish bonds over the benchmark German ones surpassed the 300-basis point barrier to end the day at 310, 18 more than Tuesday.

The mood was set by a report by the New York-based credit rating agency Moody's, which downgraded the nationalized savings groups BFA-Bankia, Catalunya Banc and NovoCaixaGalicia Banco, whose asset quality it described as “very weak.” The banking sector as a whole sustained losses of up to 7 percent at one point during the trading session. In the end, Banco Popular headed the loser list with a drop of 5.46 percent in share value, followed by Sabadell which yielded 1.64 percent, Santander which ceded 2.23 percent and BBVA which gave up 1.14 percent. The one good note was struck by Caixabank, whose shares went up 0.23 percent.