However there was better news on bond markets where the yield on both Spanish and Italian government bonds fell for a second day in response to the decision by the European Central Bank (ECB) to intervene on behalf of the weakened eurozone members and to begin buying up Spanish and Italian debt in order to reduce the two countries' borrowing costs. Both are struggling to avoid the kind of bailouts necessary to rescue ailing Greece, Portugal and Ireland.
Elena Salgado, the Spanish finance minister, insisted yesterday that her country did not need a bailout. She said Spain's total debt was 20 percentage points below the EU average.
Germany had been critical of the ECB's plan to prop up Spain and Italy, arguing that both countries should impose more stringent austerity measures before the bank intervened.
Alan Brown, chief investment officer at the fund-management group Schroders, blamed weak economic data across the eurozone, Britain and America over the past weeks, for the nervous markets. "Investors are recognising that the authorities have very few policy levers left," he said. "They have exhausted fiscal options and interest rates in most places are at rock bottom."
