Anti-austerity protests sweep across Europe

Thousands of Czech university students rally in central Prague on February 29, 2012 .

Source: Press TV
http://www.presstv.ir/detail/229280.html

Massive demonstrations across Europe have taken issue with the austerity measures adopted by the European governments against economic adversity.

The protests were held on Wednesday in the Czech Republic, France, Greece, Belgium, and Spain against government economic reforms aimed at dealing with the unprecedented debt crisis plaguing the European Union.

Trade union leaders gathered outside the European Council in Brussels, Belgium to demand an end to austerity measures.

In Spain, protests turned violent as police clashed with anti-austerity protesters in the country’s the second largest city, Barcelona. Police in riot gear beat the protesters with batons and a number of arrests were made.

Students have staged demonstrations and sit-in protests across the country to demand an end to Madrid’s austerity measures, labor market reforms, and police violence.

Thousands of Czech university students rallied in the capital Prague, slamming the country’s Education Ministry for introducing tuition fees and boosting the number of government representatives in academic bodies.

The Czech government says the reforms are necessary to boost educational standards and secure more funding.

In France, main unions gathered forces for a day of protest action against austerity measures being imposed across the European Union.

In Greece, unions staged nationwide walkouts hours after the parliament approved new spending cuts to secure a new EUR 130 billion (USD 170 billion) bailout package promised by international lenders and meant to prevent the country from going bankrupt.

The Greek and French protests are part of a day of action called by European labor organizations to pressure the leaders of the 27-member EU into adopting pro-growth measures when they gather for a summit in Brussels over Thursday and Friday.

The eurozone economy is heading into its second round of recession in just three years. The bloc’s last recession was in 2009, when its economy contracted by 4.3 percent.

The Europe plunged into financial crisis in early 2010.

Amid the debt crisis, the European Commission has predicted that the eurozone currency bloc faces double-dip recession while the wider EU economy stagnates in 2012.

EU, Chinese officials meet to discuss eurozone debt crisis

EU President Herman Van Rompuy (C) shakes hands with Chinese Premier Wen Jiabao beside EU Commission President Jose Manuel Barroso at the Great Hall of the People during their summit, Beijing, Tuesday, February 14, 2012.

Source: Press TV
http://www.presstv.ir/detail/226629.html

Senior EU officials and the Chinese Premier Wen Jiabao have held a meeting in the Chinese capital of Beijing to discuss the eurozone’s sovereign debt crisis.

“China and Europe are all round strategic partners. In the face of difficulties and challenges we ought to have mutual understanding and collaborate towards common goals,” China’s Premier Wen Jiabao said on Tuesday while addressing the conference, adding that this relationship would “bring into harmony the basic interest of both sides.”

EU President Herman Van Rompay, who also attended the meeting as one of Europe’s senior officials, called for an increased market access for European companies in China.

“The times we are living in are challenging … we became so inter-dependent that change in the growth rate in one of the two strategic partners has a direct and palpable impact on the other one. Our economic destinies are interlinked,” Van Rumpuy said.

The meeting was also attended by the president of the European Commission Jose Manuel Barraso, who said that a closer cooperation would benefit both sides.

Since early 2009, Europe has been grappling with a financial crisis which has forced a majority of the continent’s governments to adopt harsh austerity measures and tough economic reforms. The implementation of austerity cuts have often been met with violent street protests, with the latest in Greece on Sunday.

Scores have been injured in the anti-austerity demonstrations, and many people have been arrested.

Meanwhile, the Chinese foreign ministry spokesperson Liu Weimin on Monday called on “the European Union to resolve this (debt crisis) issue” as the continent is China’s largest trade partner.

Rating agency downgrades six EU economies

Source: Press TV
http://www.presstv.ir/detail/226588.html

Moody’s Investors Service has lowered the debt ratings of six European countries over concerns with the eurozone’s ongoing debt crisis and also changed its outlook on Britain and France's ratings to “negative.”

The ratings agency on Monday cut the credit ratings of Italy, Spain, Portugal, Slovenia, Slovakia, and Malta.

Moody's also warned its top ratings on three other countries -- Austria, France and the UK -- could be at risk.

"The uncertainty over the euro area's prospects for institutional reform of its fiscal and economic framework" was one of the factors in the decision, Moody's said.

Spain was downgraded to A3 from A1 with a negative outlook. Italy was also downgraded a notch to A3 with a negative outlook and Portugal was downgraded to Ba3 from Ba2 with a negative outlook, Moody’s said.

The company said Malta, Slovenia and Slovakia also received one-notch downgrades and still have negative outlooks.

Monday's credit downgrades follow similar European rating cuts by Fitch and Standard & Poor's.

S&P lowers rating of 15 Spanish banks

Source: Press TV
http://www.presstv.ir/detail/226558.html

Standard & Poor's (S&P) has downgraded the credit ratings of 15 Spanish banks, one month after reducing the Spanish government’s overall rating.

S&P announced on Monday that it had lowered its credit ratings on 10 Spanish banks by one notch and cut its ratings of another five by two notches.

"We expect the Spanish banking system's profitability to remain below its historical average over the medium term as banks continue to operate in an unfavorable economic and financial environment," the ratings agency said in a statement.

Spain's biggest bank, Santander, was lowered to A+ from AA-, while BBVA, the country’s second-largest bank, was reduced to A from A+.

S&P reduced its rating on Spain’s long-term debt to A from AA- on January 13.

Earlier on Monday, Fitch Ratings also cut the credit rating of Santander and BBVA and two other large Spanish banks, Bankia and Caixabank.

Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs.

Analysts say Spain's economy is expected to enter into a new recession in the first two quarters of 2012.

The worsening eurozone debt crisis has raised Spain's financing costs and created fears that the European country might have to seek an EU bailout like Greece.

Fitch downgrades five EU economies

Source: Press TV
http://www.presstv.ir/detail/223428.html

Fitch rating agency has downgraded the debt ratings of five eurozone states including Spain and Italy, pointing to the growing vulnerability of their economies.

On Friday, Fitch downgraded the economies of Italy, Spain, Belgium, Slovenia and Cyprus, while cutting its outlook on Ireland.

According to the agency, “near-term economic outlook highlight(s) the greater vulnerability to monetary as well as financing shocks faced by these sovereign governments."

Fitch cited that Italy faced “too-low” growth in comparison with its debt, while Spain faces "a significantly worsened fiscal and economic outlook." Italy, Spain, and Slovenia were cut by two notches.

Earlier, the European Central Bank released eurozone data suggesting that loans to the private sector fell by 1.0 percent in December in comparison with the 1.7 percent in the previous month.

Meanwhile, Spain's unemployment rate has soared to 22.85 percent-- the highest in 17 years as more than half of the country's youths remain without jobs.

There are fears that more delays in resolving the eurozone debt crisis, which began in Greece in late 2009 and infected Italy, Spain and France last year, could push not only Europe but also much of the rest of the developed world back into recession.

Merkel opposes increasing rescue fund

German Chancellor Angela Merkel gestures during the opening session of the World Economic Forum annual meeting in Davos, Switzerland on January 25, 2012.

Source: Press TV
http://www.presstv.ir/detail/223108.html

German Chancellor Angela Merkel has refused to increase the eurozone's rescue fund, stressing that the key to reassure European markets is to restore lost confidence in the EU governments' policies.

Merkel told the World Economic Forum in Davos, Switzerland on Wednesday that a 'big rethink' was required for the 17-nation zone to act well within the global economy.

The comments come as the International Monetary Fund (IMF) Managing Director, Christine Lagarde has called for the eurozone financial firewall to be reinforced by combining the European Financial Stability Fund and the European Stability Mechanism.

The IMF wants the sum available for eurozone bailouts to grow beyond EUR 500 billion (USD 647 billion).

"Now they say... 'it should be twice as big'," Merkel said.

“'If it were twice as big, we'd believe you'. Some say 'it should even be three times as big, then we'd really believe you.' And I always ask myself how long is that credible and when is that no longer credible,” the German chancellor added.

In its recently published report, 'World economic outlook,' the IMF said it was expecting a recession for the euro countries as they were struggling to overcome their debt crisis.

There are fears that more delays in resolving the eurozone debt crisis, which began in Greece in late 2009 and infected Italy, Spain, and France last year, could push not only Europe, but also much of the rest of the developed world back into recession.

Sarkozy target of thousands-strong rally

Source: Press TV
http://www.presstv.ir/detail/221828.html

Thousands of people have participated in a rally in Paris, attacking French President Nicolas Sarkozy's plans for dealing with the country's unemployment crisis, Press TV reports.

As France gauges the international fallout from losing its triple-A credit rating, Sarkozy has called for the formation of an emergency jobs council to try and boost his dipping popularity at home ahead of presidential elections, which are to be held in two rounds in April and May.

After a four-hour-long meeting at the Elysée Palace with labor and business leaders, the president on Wednesday announced an EUR 430 million (USD 550 million) plan to reduce unemployment and restart economic growth.

On Wednesday, the protesters took to the streets of the capital to voice discontent over the measures included in the plan.

activists have blamed Sarkozy's failed economic leadership for the official unemployment rate, which stands at over 10 percent, the unofficial figure amounting to over 17 percent, and the recent downgrading of France's credit rating by the New York-headquartered credit rating agency, the Standard & Poor's.

The downgrade comes, despite Sarkozy's having used to present himself as the person capable of steering the eurozone's second-largest economy out of crisis.

After the meeting, Sarkozy also said that he would introduce his employment plans before the end of January.

The president stated that he would shift part of the burden of social welfare from companies onto consumers and convince workers to agree to payment cuts in exchange for job security.

S&P's lowers EU bailout fund rating

Credit ratings agency Standard & Poor's headquarters in New York, the United States

Source: Press TV
http://www.presstv.ir/detail/221503.html

Credit ratings agency Standard & Poor's has demoted the rating of the eurozone bailout fund as the European debt crisis continues to burgeon.

The credit rating of the Financial Stability Facility (EFSF), the eurozone's rescue package, was lowered to AA+ from AAA on Monday.

The move comes as many eurozone countries have lost their credit worthiness due to their economic downturn.

France and Austria, the latest countries to be examined by the agency, saw their ratings drop from AAA to AA+ on Friday.

In December, the S&P's sounded the 'credit watch negative' alarm regarding the ratings for 15 eurozone countries including France and Germany.

Both the president of France as well as the CEO of the EFSF on Monday dismissed any potential fears caused by the S&P's move.

"We have to react to this with calm, by taking a step back," French President Nicolas Sarkozy said, adding, "At the core, my conviction is that it (the downgrade) changes nothing."

Klaus Regling, the eurozone bailout fund CEO, said that there were no needs to “get overly excited” over the news as the rescue package was only lowered by one notch.

The worsening debt crisis, however, has forced the European governments to adopt harsh austerity measures and tough economic adjustment policies.

There are fears that more delays in resolving the eurozone debt crisis could push not only Europe, but also much of the rest of the Western world back into recession.

IMF warns of eurozone downward spiral

David Lipton, First Deputy Managing Director of International Monetary Fund (file photo)

Source: Press TV
http://www.presstv.ir/detail/221419.html

A senior IMF executive has warned that the eurozone could fall into a “downward spiral” of collapsing confidence, stagnant growth, and fewer job, if it fails to get its governance in order.

The International Monetary Fund first Deputy Managing Director David Lipton also said that the European outlook is grim and risks for the global economy are high.

"At the global level, the pace of economic activity is weakening, and the risks for Europe and the world are high," Lipton added on Monday.

Pledging to strengthen ties with Asian governments to minimize spillover risks of the European debt crisis, Lipton called for stronger ties between Asia and the IMF. He added that no country and no region would be immune to the catastrophe.

Lipton's remarks prompted European banks to put away record sums of money in the European Central Bank.

Lipton's comments comes after US-based ratings agency Standard and Poor's downgraded the sovereign credit ratings of nine eurozone countries on Friday, including top-rated France and Austria.

Europe plunged into financial crisis in early 2010. Insolvency now threatens heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland and Spain.

There are fears that more delays in resolving the eurozone debt crisis, which began in Greece in late 2009 and infected Italy, Spain and France last year, could push not only Europe but also much of the rest of the developed world back into recession.

S&P downgrades EU credit ratings

Standard & Poor's has downgraded the credit ratings of several European nations. (file photo)

Source: Press TV
http://www.presstv.ir/detail/220861.html

Standard & Poor's has downgraded the credit ratings of France, Italy, and Spain, as the European debt crisis continues to intensify.

According to French government sources, the ratings agency has downgraded the country's Triple-A credit rating, while downgrading Italy and Spain's ratings as well.

However, the agency has spared other European nations such as Germany, Belgium, Luxemburg, and the Netherlands.

Meanwhile, US stocks have dropped over the recent EU concerns, while European shares also fell by more than one percent.

The news also caused the euro to slump against the dollar and yen.

Recent reports indicate that debt-ridden Greece's talks with bank creditors are in “grave condition.”

In December, S&P placed the ratings of fifteen eurozone nations, including France and Germany on credit watch negative.

The worsening debt crisis, however, has forced the European governments to adopt harsh austerity measures and tough economic reforms. Tens of thousands of the Europeans have migrated from their homelands as a result of these difficulties.

There are fears that more delays in resolving the eurozone debt crisis could push not only Europe, but also much of the rest of the Western world back into recession.

World banks brace for euro collapse

Banks are preparing for a possible euro collapse

Source: Press TV
http://www.presstv.ir/detail/217513.html

Banks around the world are preparing for the possible collapse of the euro as fears of the European debt crisis increase.

Several banks are even installing systems capable of coping with trading in old European currencies.

Meanwhile finance firms, corporations, and different governments have also turned to plans that aim at preparing them for harsh times.

Regulators have asked banks in the US and UK to provide updates on readiness levels in case of a possible euro collapse.

Some corporate firms have also started transferring their cash on a daily basis out of European countries, including debt-ridden Greece instead of once every two weeks.

Europe has for months grappled with an economic and financial crisis. Insolvency now threatens in-debt countries such as Greece, Portugal, Italy, Ireland and Spain.

Since its formation, the European Union had been a haven for those seeking refuge from war, persecution and poverty in other parts of the world.

The worsening debt crisis, however, has forced European governments to adopt harsh austerity measures and tough economic reforms. Tens of thousands of Europeans are migrating from their homelands as a result of these difficulties.

There are fears that more delays in resolving the eurozone debt crisis could push not only Europe, but also much of the rest of the Western world back into recession.

ECB unable to rescue eurozone

The President of the European Central Bank (ECB) Mario Draghi addresses the European Parliament in Brussels, on December 1, 2011

Source: Press TV
http://www.presstv.ir/detail/213285.html

The European Central Bank (ECB) chief Mario Draghi has insisted that the bank will not act as lender of last resort to struggling eurozone countries.

Draghi told members of the European Parliament on Thursday that despite pressure to resolve euro debt crisis the bank was bound by its mandate and must “act within the treaty”, AFP reported.

"The ECB's monetary policy is constantly guided by the goal of maintaining price stability in the euro area over the medium term," Draghi said.

While some called for the ECB to do more and others wanted it to do less in stemming the sovereign debt crisis, the Frankfurt-based central bank only role is to ensure price stability and to keep inflation fewer than two percent.

Draghi added that governments, individually and collectively, must assume the role of restoring the credibility of their economies as far as the financial markets are concerned, fading the hopes of seeing the bank acting as a firewall.

France have been calling for ECB to become a lender of last resort by purchasing unlimited European bonds to protect debt-ridden eurozone members from falling victim to the bond markets.

However, The ECB itself and Germany are opposed to this, fearing that the central bank ability to print unlimited amounts of money will have catastrophic effects on inflation.

Europe plunged into financial crisis in early 2010. Insolvency now threatens heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland and Spain.

There are fears that more delays in resolving the eurozone debt crisis could push not only Europe but also much of the rest of the developed world back into recession.

Eurozone unemployment hits 10 percent

About 15.8 million people are unemployed in euro zone countries

Source: Press TV
http://www.presstv.ir/detail/196745.html

Unemployment rate in the eurozone has climbed to 10 percent, supporting fears that the region's economy is in slowdown as it rises for the third consecutive month.

The number of jobless people in the eurozone region raised by 61,000 in July, bringing the total unemployment rate to 149,000 over the past 3 month, which is the highest number since May 2010.

The increase has pushed the total number of out of work in the eurozone to about 15.8 million.

Spain recorded the worst unemployment level, standing at 21.2 percent, among the eurozone countries, according to the European Union's statistics office Eurostat, dpa reported.

The youth unemployment rate, which tracks jobless people under 25 is running at 20.5 percent across the eurozone, again with Spain having the worst rate of 46.2 percent.

Unemployment reached 12.3 percent in Portugal, while the jobless rate stood at 14.5 percent in Ireland. At this time Austria had Europe's lowest jobless rate, which has slipped from 3.9 percent in June to 3.7 percent in July.

The unemployment rate remaining well above the eurozone average in states that were struggling with debt crisis indicates the economic divergence across shared currency region.

Europe has been vexed by financial crisis as the 17-nation eurozone has been plunging into the abyss brought on by fissures between strong economies such as Germany, and weaker ones such as Greece, Ireland and Portugal, which risk being engulfed by unprecedented levels of government debt.

Euro breaking down: Greenspan

Former US Federal Reserve chairman Alan Greenspan

Source: Press TV
http://www.presstv.ir/detail/195442.html

The euro is breaking down and the US economy is suffering because of Europe's debt crisis, according to former US Federal Reserve chairman Alan Greenspan.

"The euro is breaking down and the reason we're so sluggish is the level of uncertainty," Greenspan said at the Innovation Nation Forum in Washington DC on Tuesday, AFP reported.

The ex-US central bank chief emphasized that 20 percent of US exports go to Europe.

Greenspan mentioned that although the US economy is currently very sluggish, increasing the probability of another recession, he did not expect any event of the sort to happen.

"I do not expect the United States to fall back into recession, though the odds of it have increased," Greenspan said at the forum.

He said the reason why European banks are facing additional problems every day is the fact that European countries are one by one either defaulting on their debts or getting closer to do so.

New figures indicate that the US unemployment rate increased above 9 percent as the nation is gripped by economic crisis.

US President Barack Obama, who is currently on vacation despite the economic hardship of the country, warned of dangerous low economic recovery that might not be fast enough to deal with "a genuine unemployment crisis" on Saturday.

Interim ban on short-selling in Europe

Steven Maijoor, chairman of the European Securities and Markets Authority

Source: Press TV
http://www.presstv.ir/detail/193541.html

The European Securities and Markets Authority (ESMA) has announced it would temporarily ban short-selling of financial stocks in many countries to avert the world market financial turmoil.

The France-based European market regulator, a body that coordinates the European Union's market policies , released a statement Thursday night saying that the negative bets, already banned in Greece and Turkey, would take effect on Friday in France, Belgium, Italy, and Spain, The New York Times reported.

"Today some authorities have decided to impose or extend existing short-selling bans in their respective countries," said the statement, according to Steven Maijoor, chairman of the ESMA.

"They have done so either to restrict the benefits that can be achieved from spreading false rumors or to achieve a regulatory level playing field, given the close inter-linkage between some EU markets," it added.

Amid fears of some governments like France that the negative bets on stocks would bring about a worldwide panic, European financial regulators have been discussing a continent-wide interim ban on short-selling in the past few days.

However, Britain, among some other countries, publicly slammed a short-sale ban.

"We have no plans to introduce a short selling ban," Christopher Hamilton, a spokesman for the UK Financial Services Authority, said on Thursday.

US regulators are expected to be widely affected by the announcement in Europe since investors with negative views on bank stocks will be forced to close their negative bets in Europe and might have to shift them to American banks.

During the financial crisis in 2008, European and US officials imposed a temporary ban on shorting financial stocks. The ban was meant to prevent bank stocks from falling further, but in time, stocks fell anyway.

"It's a bit like suggesting we take heart patients in the emergency room off of the heart monitor because you don't want to make doctors and nurses anxious about the patient," said Andrew W. Lo, a professor at the Massachusetts Institute of Technology.

In short-sales, a trader sells borrowed shares in hopes that they will decline in value before he has to buy them back to close out his loan. The difference in price is his profit, or loss.

Short-selling is the selling of a stock that the seller doesn't own. More specifically, a short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered.

Berlusconi urged to resolve econ crisis

Italian Prime Minister Silvio Berlusconi

Source: Press TV
http://www.presstv.ir/detail/192466.html

Italian leaders of business and trade unions call on Prime Minister Silvio Berlusconi to calm the market turmoil that is threatening to plunge the country into a financial crisis.

"The situation is grave. It must be confronted with maximum determination and without excuses or shortcuts," representatives of 36 business and trade union organizations said in a statement following their Thursday meeting with the premier in Rome.

At the meeting, aimed at mapping out a strategy for economic reforms, the union and business leaders called for more liberalization, privatization, cuts in bureaucracy, labor market reform and more reliable measures to curb Italy's budget deficit, AFP reported.

The event comes after Berlusconi came under criticism following his Wednesday speech in parliament where he promised "an immediate action plan" for growth without giving any concrete details.

The Italian economy, the third largest in Europe, grew just 0.1 percent in the first quarter of the year.

On Tuesday, Italian sovereign debt risk premiums soared to eurozone record highs. Following the news, stock markets in Italy plunged by nearly three percent.

So far, Greece, Ireland and Portugal have already received bailout packages from the European Union.

There are growing fears that Italy may be next in line to eclipse the previous bailouts and further undermine the Euro.

Meanwhile, the European Commission has rejected the possibility of a debt rescue plan for Spain and Italy.

European markets tumble on crisis fears

Falls follow heavy losses in Asia, as crisis fuelled by weak US economic data and debt woes hits investor confidence.





Source: Al Jazeera
http://english.aljazeera.net/business/2011/08/201184202815736376.html

European markets have plunged on deepening fears regarding a debt crisis in the European Union and concerns about US economic growth.

London's FTSE-100, Paris' CAC-40 and Frankfurt's DAX indices all opened down over 3 per cent on Friday.

After the sharp initial drop, all three indices had recovered slightly by 1200GMT, with the British FTSE-100 at 5,282 points, the German DAX at 6,300 and the French CAC at 3,309.

Earlier, Asian markets also tumbled, after heavy losses in European and US trading through the day on Thursday.

The Nikkei index at the Tokyo Stock Exchange closed down 359.30 points (3.72 per cent) at 9,299.88. The bulk of that loss came in the opening eight minutes of trading.

South Korean shares hit their lowest levels since March, with the benchmark KOSPI index losing 3.6 per cent to close at 1,943.75.

The index had lost 7.1 per cent in the three sessions from Tuesday to Thursday, one of the steepest falls among major Asian markets.

Angela Merkel, the German chancellor, and Nicholas Sarkozy, her French counterpart, are to interrupt their holidays and to discuss the eurozone debt crisis via telephone later on Friday.

Sarkozy's office said that the French president will also speak with Jose Luis Rodriguez Zapatero, the Spanish prime minister, on the matter.

Elsewhere, Australian stocks plunged four per cent in trade on Friday after carnage on US and European markets overnight over fears of another world economic downturn.

Worst one-day fall

The benchmark S&P/ASX 200 closed 171.12 points lower at 4,105.40 after the Dow Jones Industrial Average dropped 4.3 per cent on Thursday, its worst one-day fall in more than two years.

Other markets that saw a slide included the Indian Sensex, which lost over 3 per cent to 17,145.75 (at 0630GMT) and Taiwan's benchmark index, which shed 5.1 per cent to 7,891.66.

The Russian benchmark index hit its lowest levels since May on opening, with the RTS falling 2.7 per cent to 1,806.4 points.

Yang Jiechi, China's foreign minister, called on Friday for more global cooperation to resolve the US and European debt crises. In particular, Yang called for "responsible" monetary policies from Washington DC.

China has a major stake in the future of the dollar, with some estimates putting 70 per cent of its $3.2 trillion of foreign reserves as being invested in dollar assets.

"All countries must further increase communication and coordination, push ahead reforms in the global financial system, and improve governance of the global economy," Yang told the media in Poland, where he is on an official visit.

Investors have fled stock markets on both sides of the Atlantic in the worst stock-market sell-off since the depths of the recession in early 2009, in what has turned into a full-fledged correction.

The Dow Jones and the S&P fell more than four per cent and the Nasdaq lost five per cent on Thursday on fear that the US is heading for another recession and that Europe's sovereign debt crisis is spreading to two of its largest economies.

European stocks fell to a level not seen since after the financial crisis in mid-2009, with Italy's equity market firmly in bear market territory - down nearly 30 per cent since February - as investors worried the eurozone debt crisis was spreading.

Italy's blue-chip FTSE MIB index was suspended about 30 minutes before the close. The index fell slightly more than five per cent.

Analysts predicted further losses even though stocks have fallen on nine of the last 10 days. Two-year US treasury yields fell to a record low as investors sought safety in short-term government bonds.

The S&P 500's drop puts it more than 10 per cent below its April 29 high, considered a correction.

More than 13bn shares changed hands, making it the busiest trading day in more than a year. Decliners beat advancers on the New York Stock Exchange by about 19 to 1.

Worsening data

The market's malaise springs from a number of factors. US economic data has worsened, suggesting slowing growth from an already sluggish pace in the first half.

Reporting from New York, Al Jazeera's Scott Heidler explained: "You can blame it partially on Europe, but also the economy here in the United States is very sluggish. Not only is it slow, the concern is how are they going to kickstart it. There's no saviour out there."

Moreover, he said, worried Americans' shaken confidence in the markets may exacerbate the problem.

"Those Americans who don't even invest in the market, they look to the market and if its going down, they stop their spending."

Meanwhile, Europe's sovereign debt crisis appeared to defy remedies amid growing fears that it may spread to large eurozone economies.

"The debt troubles in Europe, especially with the yields on Italian and Spanish government bonds soaring, are making investors gather as much liquidity as possible," Stephen Massocca, managing director of Wedbush Morgan in San Francisco, said.

"The [European] sovereign debt crisis ... appears to be worsening, with fears now that Italy, the third largest economy in Europe, may be find itself unable to pay off its mountain of debt and that could lead to a default that could effectively lead to the collapse of the euro," reported Al Jazeera's Jonah Hull from London on Friday morning.

Hull said that the sovereign debt crisis coupled with the poor economic indicators from the US were having a knock-on effect on European and Asian markets.

"Effectively it's fear in the markets feeding on fear," he said.

EU leaders urged to act on debt crisis

European Commision President Jose Manuel Barroso (file photo)

Source: Press TV
http://www.presstv.ir/detail/192412.html

Head of the European commission Jose Manuel Barroso urges European countries to re-assess the eurozone bailout fund, calling it insufficient to contain the EU's debt crisis

"Whatever the factors behind the lack of success, it is clear that we are no longer managing a crisis just in the euro area periphery," Barroso wrote in a letter to European Union leaders.

He said European governments should rapidly review the European Financial Stability Fund (EFSF) -- the EU's bailout fund -- to reduce the risk of an overflow of the growing debt crisis across the eurozone.

The EFSF was set up in a bid to help maintain stability in the eurozone by lending up to EUR 440 billion to its member states.

Barroso's letter indicates that some states may already be pulling back from their commitments.

After the Greek bailout in July, eurozone member states agreed to widen the scope of the EFSF, and allow it to intervene in secondary bond markets and to pump money into troubled banks through government loans -- changes which yet have to be implemented by individual Eurozone states.

So far, Greece, Ireland and Portugal have already received bailout packages from the European Union, which has spent much of the past 18 months trying to battle its debt crisis.

Fears are, nonetheless, growing that Italy and Spain - eurozone's third and fourth largest economies -- may be next in line to eclipse the previous bailouts and further undermine the euro.

Spanish police attack protesters

Spanish protesters in Madrid, August 4, 2011

Source: Press TV
http://www.presstv.ir/detail/192427.html

Spain's riot police have attacked hundreds of demonstrators in the capital city of Madrid protesting the government's handling of the country's economic crisis.

At least 20 people were injured during the Thursday incident after riot police attacked the protesters in front of the interior ministry, AFP reported.

For the third straight day, over 200 police forces were deployed to prevent protesters from blocking Madrid's main square, Puerta del Sol.

This was the most serious incident in Spain since a movement began in mid-May to protest economic crisis, soaring unemployment and political corruption in the country, witnesses say.

Polls show that two-thirds of the population in Spain sympathizes with the movement.

On Tuesday, Spain's sovereign debt risk premiums soared to eurozone record highs, sending jitters into the country's stock markets.

The news has raised fears that Spain -- Eurozone's 4th largest economy -- may be next in line to eclipse the previous bailouts and further undermine the euro.

So far, Greece, Ireland and Portugal have already received bailout packages from the European Union.

The European Commission, however, has rejected the possibility of a debt rescue plan for Spain.

Italy and Spain have been under mounting pressure in recent weeks as markets feel that the size of Eurozone's bailout fund is not sufficient enough to protect larger economies.

Italy, Spain debts threaten Eurozone

Source: Press TV
http://www.presstv.ir/detail/192133.html

More profound debt crises are unfolding in Italy and Spain, raising fears that the two major European economies may be next in line to turn to the European Union for new financial rescue packages.

On Tuesday, Italian and Spanish sovereign debt risk premiums soared to Eurozone record highs, sending jitters into both countries' stock markets, AFP reported.

Following the news, stock markets in both Italy and Spain plunged by nearly three percent.

Spanish Premier Jose Luis Rodriguez Zapatero delayed plans to leave on vacation to monitor the economic situation in his country.

In Italy, Finance Minister Giulio Tremonti held emergency meeting of the Financial Stability Safeguard Committee to discuss the country's increasing economic problems.

So far, Greece, Ireland and Portugal have already received bailout packages from the European Union.

There are growing fears that Italy and Spain -- Eurozone's 3rd and 4th largest economies -- may be next in line to eclipse the previous bailouts and further undermine the Euro.

Italy and Spain have been under mounting pressure in recent weeks as markets feel that the size of the Eurozone's bailout fund is too small to protect larger economies.

Meanwhile, the European Commission has rejected the possibility of a debt rescue plan for Spain and Italy.

“The question of a program of emergency aid is certainly not on the table," said Chantal Hughes, speaking for Economic Affairs Commissioner Olli Rehn in Brussels.