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Saturday, July 21, 2012

Wall St falls as Spain bailout feared

English: The corner of Wall Street and Broadwa...
English: The corner of Wall Street and Broadway, showing the limestone facade of One Wall Street in the background. (Photo credit: Wikipedia)
NEW YORK (Reuters) – U.S. stocks broke a three-day winning streak on Friday as Europe's debt crisis engulfed markets with renewed fears that Spain may be unable to dodge a costly bailout. The news that the heavily indebted region of Valencia asked Madrid for financial aid interrupted a period of relative calm for Wall Street and raised the specter that the euro zone’s fourth-largest economy may itself need to be rescued. Bank shares, sensitive to signs of trouble in Europe, were among the biggest losers. The KBW bank index fell 1.9 percent, taking its weekly decline to 2.3 percent. Shares in Morgan Stanley fell 3.5 percent to $12.78. Valencia, which already used several government credit lines in the first half of the year to meet debt repayments, still needs to repay 2.85 billion euros by the end of the year. That figure is not huge compared to the billions used in other EU bailouts, but investors are concerned about the overall stability of the country and its banks. “We don’t want to go to a full Spanish bailout if we don’t have to,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. “Maybe the market is just over reacting to it, but these days you never know.” ... Continue to read.
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