Spain, EU urge fast action on Greece: Madrid

3rd August 2011, Comments 0 comments

Spain's prime minister and the European Union president agreed on Wednesday on the need for quick application of a new Greek-eurozone rescue package to calm markets, the government said.

Prime Minister Jose Luis Rodriguez Zapatero called EU President Herman Van Rompuy as he tried to grapple with the financial markets, which sent Spain's state debt risk premium soaring to a record high level.

"They agreed on the need for the agreements on the Greek rescue plan and the reform of the European mechanism of support for eurozone nations to be approved as soon as possible by European governments to give certainty and confidence to financial markets," the Spanish government said in a statement.

The premium demanded for buying Spanish 10-year bonds over safe-bet German bonds surged Wednesday morning to 407 basis points -- the highest since the introduction of the euro in 1999.

It was the second day in a row that investors had pushed the premium on Spanish government debt to a record high, fearing that Madrid's problems will only get worse as economic growth slows.

Zapatero will meet Finance Minister Elena Salgado in the afternoon to "analyze the latest financial market movements," the prime minister's office said in a statement. Government spokesman Jose Blanco will also attend.

Eurozone leaders last month agreed a second rescue package for Athens worth 109 billion euros ($158 billion), plus about 50 billion euros from the private sector up to 2014 alone.

The package follows an 110-billion-euro bailout agreed with the EU and the International Monetary Fund last year which included a quid pro quo of tough austerity measures.

© 2011 AFP

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