Bank of Spain Warns Economy is Shrinking at a Significant Rate

European stock markets have fallen amid concerns about Spain and as trade unions hold a general strike in Greece.

Spain’s Ibex index was down 3.5%, while markets in London, Paris and Frankfurt were down more than 1%.

The Bank of Spain said in a report that the Spanish economy had continued to shrink at a “significant rate” in the third quarter of the year.

Spain is currently in a deepening recession, with the unemployment rate at its highest level since the 1970s.

Worries about Spain also caused the country’s borrowing costs to rise, with the yield on 10-year Spanish bonds traded on international markets rising to 6.02% from 5.67%.

And the euro fell to a two-week low against the dollar, down 0.35% at $1.2858, having earlier hit $1.2848.

Spain’s Economy Minister Luis de Guindos said on Saturday that he expected the economy to contract by about 0.4% in the July-to-September quarter.

And in its latest monthly report, the Bank of Spain said: “Available data for the third quarter of the year suggests that GDP kept falling at a significant rate, in a context of high financial tensions.”

via BBC

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