Spain, France Face Higher Borrowing Costs

The long reach of the European debt crisis touched Spain and France Thursday, with both countries forced to pay more to finance their governments.




Spain, Europe's fourth biggest economy, paid its highest borrowing costs since 1997 to sell nearly $5 billion in bonds. Madrid was forced to pay almost 7 percent interest, the point at which overwhelming government debts have pushed Greece, Ireland and Portugal to secure international bailouts in the last year and a-half. But Spanish Finance Minister Elena Salgado said her country is "absolutely not at risk" of needing a bailout.



France also had to pay higher interest rates to finance its debt. Its borrowing costs on 10-year notes are now more than twice that for European economic powerhouse Germany, even though both countries have the same top AAA credit ratings.



With investors worried about the spread of the continent's debt contagion, stocks fell Thursday in London, Paris and Frankfurt. The Fitch Ratings service said Wednesday that U.S. banks face a "serious risk" that their credit worthiness will deteriorate if the European debt crisis is not resolved.



In Greece, thousands of protesters took to the streets of Athens to demonstrate against new austerity measures, in the first major rally against the new Greek coalition government of Prime Minister Lucas Papademos. His government is seeking to impose spending cuts, eliminate government jobs and increase taxes in an effort to secure release of an $11 billion installment of its 2010 bailout to avoid bankruptcy next month.



The protest was part of an annual rally marking a bloody student uprising in 1973 that led to the downfall of the military dictatorship in Greece.



In Rome, new Italian Prime Minister Mario Monti laid out his austerity measures to parliament. Monti said he intends to overhaul the country's pension system and he called for a new property tax on the primary homes of Italians as part of a plan to trim the country's $2.6 trillion debt load. He said Italy's lack of such a property tax is "a peculiarity" in Europe.

fuente: La Voz de América, http://www.voanews.com/english/news/europe/Europes-Debt-Crisis-Spain-France-Face-Higher-Borrowing-Costs-134041788.html

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