Spain slams 'speculative attacks', threatens legal action

7th May 2010, Comments 0 comments

Deputy Prime Minister Maria Teresa de la Vega warned Friday that Spain's new legal code would punish "unacceptable speculative attacks" such as those she blamed for the sharp drop in Spanish stocks this week.

"This week worrying situations emerged based on information without any objective base, which hurt us and negatively affected out economy. Speculative attacks are unacceptable," she told a news conference.

"Spain will not allow its prestige to be toyed with and that its financial market is put in danger by punishable antisocial behaviour," she added.

The minister said that a reform to Spain's penal code expected to be passed soon in the Senate "will punish the dissemination of information or rumours with the aim of affecting stock market valuations."

"This is a clear message to speculators," she said.

Earlier this week both the International Monetary Fund and Spanish Prime Minister Jose Luis Rodriguez Zapatero firmly dismissed speculation that Spain was seeking a massive loan from the lending institution, a rumour that had caused strong losses to stocks in Madrid.

The market rumours began swirling after eurozone finance ministers and the IMF to approved a three-year 110-billion-euro bailout loan package for Greece, fueling fears that other struggling eurozone nations may need assistance.

Ratings agency Standard & Poor's last week lowered Spain's long-term sovereign credit rating to AA from AA+ on prospects that its recession could further weaken public finances.

In Paris France's market regulator said it too would probe speculative attacks on the Spanish and Italian economies.

"Whether it is French banks or foreign banks operating in Paris, whether it is funds in Paris, Berlin or London, is not important," declared Jean-Pierre Jouyet, head of the AMF financial market authority.

"When I hear of speculation, when I see abnormal market movements, there will be inquiries and punishments."

French President Nicolas Sarkozy and German Chancellor Angela Merkel on Thursday urged EU leaders to crack down on the speculative financial trading blamed for worsening certain countries' sovereign debt, and to examine the role of credit rating agencies.

© 2010 AFP

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