- Spanish bond yields surge a regional debts mount, economy shrinks
- Greece welcomes Troika to Athens amid renewed Eurozone exit talk
- Single currency falls to 11-year low against the yen
- UK Gilt yields hit record low, Sterling touches 3.5 year high versus Euro
1550 BST: Crisis? What crisis
Okay, it's hardly the stuff of former Labour Prime Minister Jim Callaghan (and he never said those words anyway) but the tone of Italy Prime Minister Mario Monti this afternoon is rather symbolic of the "head-in-the-sand" accusations Eurozone leaders often face.
In closing remarks from a one-day bi-lateral summit in Sochi, Russia (site of the 2014 Winter Olympics) with President Vladimir Putin, Monti said "it's not yet time" for any sort of emergency summit of the region's leaders and added (in a somewhat technocratic manner) that it's the role of EU Council President Herman Van Rompuy to call those anyway.
Putin, for his part, reassured Monti that his nation would keep a substantial portion (more than 40 percent) of Russia's $500bn in foreign currency reserves in euro-denominated assets.
1540 BST: Winding down
Looks like we're going to end the day deeply in the red with a 2.5 percent decline for the FTSE Eurofirst 300 and sharper declines of 3.68 percent (DAX) 3.25 percent (CAC-40) and 2.4 percent (FTSE 100) in the major domestic markets around the region (Short selling bans in Italy and Spain seemed to have moved "risk off" trades into the CAC and the DAX as the losses accelerated quickly following the announcements).
Tomorrow we'll get a comprehensive look at manufacturing data around the Eurozone with "flash" PMIs at 0858 BST and chance for Spain to test the bond markets yet again with a sale of 3-month and 6-month Treasury bills, or Letras.
1515 BST: Quick bond update
Benchmark 10-year German bunds have backed-off all-time lows are but still trading at a miniscule yield of 1.168 percent, according to the dealing platform Tradeweb. France's 10-year OATs are priced at a 100 basis point premium to Bunds while Italy's trade at a 517 basis point premium. The spread to own Spanish government debt instead of bunds now stands at 633 basis points.
1505 BST: Fear and ... more fear
The VIX, an index-traded measure of implied volatility within stock options, formally know was the "Chicago Board Options Exchange Volatility Index" but often referred to as the "Fear Index" rose the most in more than 8 months today to change hands at 19.92 as investors count the cost of slowing growth in China and the United States and the seemingly slow-motion implosion of the European debt crisis.
1430 BST: Big declines for US stocks
Opening minutes of trading in the United States see a triple-digit decline for the Dow Jones Industrial Average and a full 2 percent slump for the tech-heavy Nasdaq. Broadest measure of US stocks, the S&P 500, falls 12 points, or 0.88 percent, to 1,2350.68 in the first few minutes of trading.
1400 BST: More negative yields
France's €3.99bn 3-month Treasury bill sale draws a yield of -0.02 percent, the second consecutive sale of bills by the French treasury to elicit a negative yield.
1355 BST: Spanish short-selling update
It seems the ban will apply to *all* securities traded on Spanish markets, not simply bank and financial stocks. Far-reaching rule not particularly confidence-inspiring.
1330 BST: Spain follows Italy
Spanish market regulators have followed their Italian counterparts by announcing an immediate ban on the short selling of financial stocks. The Spanish ban is longer - 3 months versus the original one week in Italy - but will not apply to so-called "market makers" on Spain's stock markets.
Spain's IBEX has recovered slightly from this morning's session-lows and is currently down 2.5 percent from Friday's close.
1240 BST: Short selling ban
Italy's stock market regulator, CONSOB, has issued a ban on the short selling of bank and insurance sector stocks. The prohibition, which begins immediately, will last for the balance of the week, the authority said.
Italy's FTSE MIB showed marginal improvement following the rule change after stocks had fallen more than 5 percent to a one-month low of 12,968.
1130 BST: A bridge too far?
Reuters is reporting a European Commission spokesperson who says the next disbursement of funds to Greece under terms of the €240bn bailout may not be released until September, when the on-going review by the Troika is completed. How this squares with Greece's cash crisis - which will likely empty its coffers within weeks - is anyone's guess, although it does look as if Greece will need to organize a bridge loan of some kind from the EFSF.
1110 BST: Deepening declines
Spain's IBEX has fallen more than 10 percent in the past two sessions alone, spiking below 6,000 for the first time since March of 2003. Italy's FTSE MIB is also under pressure, falling more than 5 percent to around 12,430, the lowest level since at least 2002. At one point during the trading day, more than third of FTSE MIB shares were suspended due to market "downtick" rules.
1045 BST: We'll pay you
Germany was paid to borrow €2.7bn in 12-month bills as it Bubill auction drew the first negative yield (-0.054 percent) for a short-term debt auction in history. The sale falls in the wake of this month's cut in the European Central Bank deposit rate. The now zero-percent rate has drawn overnight money from the ECB into the region's broader capital markets and pushed a plethora of bond yields into negative territory, including today's Bubill auction.
Germany's benchmark 2-year Schatz yield has traded below zero for the ninth consecutive day. A Dutch t-billl sale on 16 July drew a negative yield of 0.041 percent while a sale the following day by the temporary bailout fund, the EFSF, sold €1.488bn in 6-month bills at a negative yield of -0.0113 percent.
1015 BST: Every confidence
Spain's Economy Minister, Luis de Guindos, has dismissed the idea that his country will need a "full scale" bailout beyond the €100bn negotiated to rescue its banking sector, answering "absolutely not" to a question from a reporter prior to his testimony before Spanish lawmakers on the terms and conditions linked to the bank bailout which was approved by Eurogroup Finance Ministers late last week.
0945 BST: Collateral support
Flight-to-safety trades are lifting UK Gilt prices, pushing the yield on benchmark 10-year debt to a record low 1.438 percent, cracking the previous barrier set on 1 June of 1.439 percent. September Gilt futures are also trading at an all-time (contract) high of 122.16.
0925 BST: Bank of Spain
Within minutes of publishing its (unscheduled) update on the domestic economy, the Bank of Spain's Deputy Governor, Fernano Restoy, encouraged Prime Minister Mariano Rajoy to push for more spending cuts and structural reforms - as well as for deeper integration within the Eurozone.
Spanish 10-year bond yields are stuck at a Eurozone high 7.55 percent while the IBEX has given back around 2.75 percent to trade at around 6,075.8
0905 BST: Spanish GDP tally
The Bank of Spain said second quarter GDP contracted an astonishing 1 percent from the same period last year and 0.4 percent from the previous three months.
0900 BST: Euro staggers
The single currency is trading at fresh two-year lows of 1.2081 against the US dollar this morning - which itself if finding safe-haven bids as it rises to a 19-month high of 0.9939 against the Swiss franc. The dollar index is trading at 83.835, the highest mark in more than two years.
It will be interesting to see if the Swiss National Bank enters the market to defend the 1.20 "cap" it's mandated against the Euro if the single-currency selling continues on the foreign exchange markets.
0845 BST: Back-of-the-envelope
Rough estimates of Spain's bank capital needs over the next three years range from the €60bn suggest by the government-appointed audit of Oliver Wyman to the €105bn calculated by analysts at RBS, who estimate that Spanish banks will need to raise at least half of the entire extra capital required by *all* European banks between now and 2014. Added to this financial pressure, of course, is the burden of nearly €191bn in regional government debt, €63bn in local authority debt and €27bn in social security liabilities, all of which need to be serviced, rolled over or paid out in the next two years.
Credit default swap costs on Spain's benchmark government debt rose 28.5 basis points to Eurozone high of 634 basis points today, meaning an investor would need to pay €634,000 each year for five years to insure €10m in Spanish debt from default - a €28,500 increase from Friday.
Spain's benchmark 10-year bonds are trading at a yield of 7.54 percent. The extra yield, or spread, investors demand to hold Spanish debt instead of German bunds is now 639 basis points, the highest since the adoption of the single currency in 1999.
0825 BST: Italy caught in downdraft
Benchmark Italian 10-year bonds are trading nearly 20 basis higher at 6.4 percent - and at a higher yield than equivalent Irish debt for the first time in nearly three years, according to dealing platform Tradeweb. Italian banks shares are falling hard this morning, as well, with Mediobanca, Banco Popolare and Banca Monte dei Paschi di Siena all down more than 5 percent before being suspended from trading on the FTSE MIB.
0810 BST: Good Morning!
European stock markets open on the back foot with a full 1 percent decline for Britain's FTSE 100 and a deep 1.9 percent slump for Spain's IBEX. Italy's FTSE MIB is also down 1.9 percent and we're seeing similar declines in markets in France and Germany. The broad FTSE Eurofirst 300 is down around 0.8 percent to 1,040.87.
Deja-vu all over again, as the linguistically inaccurate, but practically applicable saying goes, as we watch the economic fortunes of Greece and Spain once again dominate the European financial market news flow.
Spain's borrowing costs has surged uncomfortably close to bailout levels since its shaking 10-year debt auction last week. Spain's benchmark 2-year bonds are trading at Eurozone record 6.124 percent while 10-year notes are marked at a yield of around 7.55 percent. Investors are concerned the borrowing costs will prevent Spain from raising the more than €15bn needed to stabilize the country's 17 semi-autonomous regions in the second half of this year. Spain's Murcia region is expected to ask the federal government for financial assistance as early as this week. Spain will test the markets again tomorrow with a sale of three and six month treasury bills.
In Greece, officials from the so-called Troika of lenders to the debt-stricken nation visit Athens this week to assess its record in meeting commitments tied to its €240bn bailout. Speculation is increasing among the investor community that the IMF will refuse to release its share of the next €31.5bn rescue tranche to Greece because it's too far off course from the roadmap agreed with the previous government.
Elsewhere, the Euro sank to an 11-year low against the yen in overnight trading and was changing hands against the US dollar at 1.2106, well past previous two-year lows while September bund futures rose 26 ticks to trade at a near record high of 146.03.