Bank of Spain Warns Economy is Shrinking at a Significant Rate

European stock markets have fallen amid concerns about Spain and as trade unions hold a general strike in Greece.

Spain’s Ibex index was down 3.5%, while markets in London, Paris and Frankfurt were down more than 1%.

The Bank of Spain said in a report that the Spanish economy had continued to shrink at a “significant rate” in the third quarter of the year.

Spain is currently in a deepening recession, with the unemployment rate at its highest level since the 1970s.

Worries about Spain also caused the country’s borrowing costs to rise, with the yield on 10-year Spanish bonds traded on international markets rising to 6.02% from 5.67%.

And the euro fell to a two-week low against the dollar, down 0.35% at $1.2858, having earlier hit $1.2848.

Spain’s Economy Minister Luis de Guindos said on Saturday that he expected the economy to contract by about 0.4% in the July-to-September quarter.

And in its latest monthly report, the Bank of Spain said: “Available data for the third quarter of the year suggests that GDP kept falling at a significant rate, in a context of high financial tensions.”

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza