Tuesday, July 10, 2012

Euro-zone finance ministers meeting here Monday gave Spain an extra year to bring its budget deficit back in line with the bloc's rules and promised €30 billion would be available by the end of July to start a big bailout of the country's banks.

The concession on the deficit is designed to avoid provoking a further downward plunge of the already sickly Spanish economy. On Monday, annual yields on 10-year Spanish government bonds crept above the 7% mark, a level deemed unsustainable. 

It also came as European officials wrangled over last month's agreement of euro-zone leaders to allow the bloc's bailout fund to directly boost the capital of struggling banks in the region. In dispute is whether governments of beneficiary banks would have to make good on any losses suffered by the fund on its investment in the banks.