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Spain's bond yield at record 7.4%

Greece risks default

23 July, 11:28
Spain's bond yield at record 7.4% (ANSA) - Rome, July 23 - The yield on Spain's 10-year bonds reached a new euro-era high of 7.4% on Monday, ushering in what will be another difficult week for the eurozone. The yield spread between the Spanish Bonos and the German benchmark Bund stood at 627 points. The spread between 10-year Italian bonds and the German benchmark opened at 520.3.

In Spain protests over government austerity measures continued as Murcia looked set to become the second autonomous region after Valencia to apply for a central government bailout.

Meanwhile the German weekly Der Spiegel cited allegations by unnamed "official" EU sources that the International Monetary Fund intends to block aid to Greece, leading to a probable default in September, on grounds that the country will be unable to reduce its debt to 120% of GDP by 2020 and meet its reform commitments.

This would cost Eurozone countries a further 10-50 billion euros in aid.

European Central Bank President Mario Draghi said on Sunday that "the euro is irreversible" and that the monetary union is not in danger of "exploding". Germany's constitutional court is due to rule on September 12 on the creation of the permanent European rescue fund for countries with soaring borrowing costs.

Meanwhile Italian Premier Mario Monti is acting on both foreign and domestic fronts. On Monday Monti is in Moscow to meet with Russia's leaders and business community. The Italian premier is then due in Finland to where he will try to overcome Helsinki's resistance to the EU rescue scheme, before heading for Spain. In Italy the government is preparing for a "boiling" summer with further spending cuts of between 6 and 8 billion euros.

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