MADRID/London (Reuters) - the Spain short-term borrowings jumped on Tuesday as the markets in the euro area is the feast of Easter break still wear on a restructuring of potential Greek debt with implications for other sovereigns.
During this time, the France became the first euro-zone state publicly to support the candidature of the Governor of the Bank of Italy Mario Draghi European to succeed Mr. Jean-Claude Trichet, President of the Central Bank later this year.
Statement by French President Nicolas Sarkozy, a conference press jointly with Italian Prime Minister Silvio Berlusconi, has raised the pressure on the euro Germany area central to accept Draghi after its own candidate, Axel Weber, abandoned in February.
The Spanish Treasury sold 1.97 billion euros for projects in the short term from the average yield of 3 months jumping to 1.371% compared to 0.899% in March and the rate of 6 months to 1.867% of 1.361 per cent last month.
Investors have continued to exclude the Greek debt mounting fears that the country will have to restructure its debt, which the official data of the European Union showed Tuesday had exploded to 142,8% of gross domestic product in 2010.
Demand for premium investors holding bonds of the German Greek Government instead bunds of reference is passed to a new era of euro higher over 12 percentage points and the cost of insuring Greek debt against default rose sharply.
The Greek Government has said that he would take all necessary measures for its budget under a EU/IMF rescue program goals after last year's public deficit has been reviewed rising to 10.5% of GDP.
Athens attributed the difference to the original objective of 8 per cent and the latest forecast of 9.6%, to a more profound than expected recession that hit tax income and security social contributions.
"The fact that the ratio of Greek deficit for 2010 is now also in double-digit territory should further fuel the debate on the Greek sovereign debt restructuring," said Ralph Solveen, an economist at Commerzbank.
The ECB under Trichet is fiercely opposed to any restructuring.
While Spanish auction sales were heavily oversubscribed, they offer little evidence that Madrid was successful in itself decoupling of the woes of the debt to lower eurozone partners, Greece, Italy and Portugal.
"Although they give levels are perhaps still currently cause more concern than pure alarm and simple, there is little room for further these increases in the costs of financing the short dated before the market starts to cross the prospect of a frightened Spanish contagion,"said strategist of rate of Rabobank Richard McGuire."."
SPAIN CONCERNS LINGER
Official figures of the European Union for 2010 showed most of the Member States began to reduce budget deficits inflated by the financial crisis through austerity measures last year, but the levels of public debt swell almost everywhere.
The Spain debt remained relatively low at 60.1% of GDP, more than 20 percentage points less than the Central euro Germany and the France savings.
However, concerns about focus of Spanish public finances on the cost of rehabilitation of regional savings banks to the market and to face the impact of a real estate crash which experts say still has more to run.
Despite official denials of Athens and Brussels, two Greek newspapers said Friday that the Government plans to extend the maturities of debt to make it more sustainable.
Best selling daily Ta Nea speaks of a "Velvet restructuring" which would include extending of outstanding debt and a voluntary agreement with lenders to modify the terms of repayment.
Talks between the Portugal, the most recent euro-zone Government to request a financial rescue and officials of the European Commission, the European Central Bank and Monetary Fund International continued during the weekend of Easter, said the officials.
The two sides are racing to reach an agreement on the conditions for a rescue of 80 billion euros planned in time for the meeting of Finance Ministers of the EU on May 16, so it can be sealed before the elections General Portuguese snap on 5 June.
Spain implemented public spending cuts and salary, raise its retirement age and began to liberalise its labour market in response to the warnings of a non-viable public deficit and an economic model plu dependent on an area near the old property.
(Additional Emmanuel Jarry and James Mackenzie in Rome, Jan Strupczewski in Brussels and George Georgiopoulos Athens; written by Paul Taylor; editing by Mike Peacock)
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