Spain woes drive investors out

Published:  31 May at 6 PM

Worries over the Spanish financial situation have triggered losses for stakes across the EU and the US, as investors have switched to safe haven investments, including German and US government bonds.

In the meantime, the indicative price of borrowing for Spain went up as investors agonised over its deficit. The European Commission said Spain could be offered extra time to reach an agreed upon EU deficit target.

Olli Rehn, EU economic affairs commissioner, said the body was ready to consider an extension to the deadline by one year to 2014, in order to fix the excessive deficit--so long as Spain restrained its deficits in autonomous regions and introduced a "solid" budget for the next two years.

The EU will introduce a more complete assessment during coming weeks, said Rehn. Concerns over the Spanish financial situation increased the yield on the country’s 10-year bonds up to 6.7 percent.

Yields show how much investors want in return for having a bond, with a bigger yield a sign of a greater perceived risk. It is also a sign of how much a country must pay to borrow funds on the global money markets.

Investors transferred money into German and US government bonds, considered safe havens.