Wednesday, June 16, 2010

YOUR DAILY DOSE of bad news on Spain's economy:
Renewed talk of a bailout for fiscally strained Spain weighed on financial markets ahead of a key labor-market reform the government will present later Wednesday.

Spain's risk premium, as measured by the yield spread on Spanish bonds over German bunds, hit its highest level since the creation of the euro after El Economista reported the International Monetary Fund, the European Union and the U.S. Treasury are preparing a EUR250 billion liquidity facility for Spain.

Spain's government, banks and companies have faced increasing difficulties financing themselves in recent weeks as investors fret over the country's double-digit budget deficit, 20% unemployment rate and lengthy economic downturn.

The Spanish government called a press conference in Madrid Friday with Prime Minister Jose Luis Rodriguez Zapatero and IMF Managing Director Dominique Strauss-Kahn. Government officials said the IMF chief is traveling to Madrid for general talks on the economy but denied some sort of financial support package was in the works.