Headlines

Concerns that Spain won't be able to meet its funding needs helped to spark a global selloff in financial markets Friday, as the government warned the country's economic contraction would drag into next year, and one of its most indebted regional administrations asked the central government for help refinancing its debt, The Wall Street Journal reported. The market slump underscored fears that Spain's finances are spiraling out of control and could require the country to seek a full rescue from the European Union.

Tiny Murcia was on course on Sunday to be the second Spanish region to request help from the central government to keep it afloat, as media reported half a dozen local authorities were ready to follow in the footsteps of Valencia, Reuters reported. How Spain's 17 indebted autonomous regions, locked out of international debt markets, refinance 36 billion euros in debt this year has been a major source of concern for investors ever since they missed deficit targets last year. Spain's central government set up an 18 billion euro ($22 billion) fund earlier this month to ease their funding pain.

As Prime Minister Mario Monti fights to protect Italy from the contagion driving up its borrowing costs to perilous levels, one region in particular has been in the spotlight: Sicily, which some fear has become “the Greece of Italy” and is at risk of defaulting on its high public debts, the International Herald Tribune reported. Mr.

Massive mortgage debt is top of mind for Bank of Canada Governor Mark Carney, but in his quest to curtail Canadians’ borrowing, he might want to start thinking about the vehicles sitting in their driveways and garages, too, The Globe and Mail reported. The use of long-term loans to purchase new vehicles is skyrocketing, as car buyers look for ways to cut or hold steady a key component of a family’s spending – the monthly car payment.

The International Monetary Fund's mission chief for Greece, Poul Thomsen, walked grim-faced into his first meeting with newly elected Prime Minister Antonis Samaras on July 5 wearing a black tie looking as if he was going to a funeral. Whether he was making a point or not, the first meet-and-greet visit by Greece's exasperated international lenders with the new government was blunt, both sides told Reuters.

Higher loan-loss provisions by banks and greater "sacrifice" by founders or controlling shareholders of troubled companies are among the tighter norms for loan restructuring recommended by a panel appointed by India's central bank, Reuters reported. Banks should set aside 5 percent of total assets for standard loans that are restructured, up from 2 percent currently, while provisions for loans that are already restructured should be increased to 5 percent in a phased manner over two years, the report said.

German lawmakers on Thursday resoundingly backed the latest European rescue, a package of loans from the euro-zone bailout fund to prop up weakened Spanish banks, handing Chancellor Angela Merkel a victory as doubts about the euro rise in Germany, The Wall Street Journal reported. The vote did little to reassure jittery financial markets about Madrid’s economic recovery or its ability to repair its beleaguered banks.

France wants the euro zone to move quickly on its latest steps toward integration in the currency union, French Finance Minister Pierre Moscovici said Thursday, The Wall Street Journal reported. "Our agenda is strong and it will be fast," he said in a brief interview. Mr. Moscovici, who met with officials Thursday in Washington, said last month's European summit marked "huge progress" in addressing the euro zone's troubles. "We made our first steps toward integration—a banking union, fiscal union, budgetary union and further on political union," he said.

The government said Thursday that it will step up efforts to support low-income households suffering from snowballing debt by offering them more low-cost financial products, The Korea Times reported. To that end, the Financial Services Commission (FSC) has decided to increase the amount of financial products tailored to the poor to 4 trillion won from the current 3 trillion. The new measure is aimed at reducing the financial burdens of low-income families to prevent them from becoming the epicenter of a household debt crisis.

Eurostat, the European Union’s statistic agency, has weighed in on the question of whether a government should still have to retain final liability for any losses that may arise from a “direct” recapitalization of its banks from the euro-zone bailout fund, The Wall Street Journal Brussels Beat blog reported. When euro-zone leaders decided at their most recent summit to soon allow their rescue fund to “directly” bail out struggling lenders, their aim was to prevent that bank funding from also turning their host government into a bad investment.