WORLD
Stock markets fall on fears eurozone debts may spread
Baku, July 12 (AZERTAC). European shares have fallen further on concerns that the debt crisis in the eurozone may spread to Italy and Spain.
Italy’s main index was down 0.2% in lunchtime trading after earlier being 4% lower. Spanish shares had lost 1.4%, while the UK’s FTSE 100 had shed 1.3%.
The yields on Italian and Spanish bonds also continued to rise as worries over the two countries grew.
On Monday, eurozone finance ministers said they were ready to pass new measures to stop the crisis spreading.
The euro was also lower, falling in early Tuesday trading to a four-month low against the dollar at $1.3958.
The concern is that Italy and Spain may have to follow Greece, Portugal and the Republic of Ireland and seek a European Union and International Monetary Fund (IMF) bail-out.
Eurozone finance ministers said increased efforts to "improve the euro area’s systemic capacity to resist contagion risk" would include "enhancing the flexibility and the scope" of the European Financial Stability Facility (EFSF).
This is the bail-out fund to which eurozone member states contribute.
Finance ministers also agreed to look at lowering the interest rates that Greece, Portugal and the Irish Republic have to pay, plus lengthening the maturities of their loans.
"Ministers reaffirmed their absolute commitment to safeguard financial stability in the euro area," the finance ministers said in a statement after eight hours of talks in Brussels.
Eurozone finance ministers are now due to meet later in Brussels with their colleagues from European Union nations that do not use the euro.
Concern that Italy could be the next country to require a financial bail-out comes as Italy’s Finance Minister, Giulio Tremonti, announced that he would leave Tuesday’s talks early so he could continue to work on an austerity budget to reduce Italy’s public deficit.
He has proposed 48bn euros ($67bn; £42bn) in budget cuts over three years and aims to cut the deficit to zero by 2014 from this year’s 3.9% of gross domestic product.