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.

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.

Spain's housing and banking sectors continue to deteriorate, government data showed Wednesday, providing the latest indication that the country's economy remains caught in a protracted recession, The Wall Street Journal reported. House prices in the second quarter declined at the fastest pace since the start of the crisis, the public-works ministry said, while bank deposits saw a record decline in May from a year earlier, and bad loans increased for a 14th month in a row, the Bank of Spain reported.

Spain's new central bank chief said the bank failed to act swiftly after the country's housing market crashed half a decade ago, a rare show of self-criticism of national institutions that comes as Spain enters the last stretch of negotiations on the details for a banking bailout, The Wall Street Journal reported. Bank of Spain Gov. Luis Maria Linde's speech in Parliament on Tuesday was his first significant statement since he was appointed by conservative Prime Minister Mariano Rajoy a month ago, replacing Miguel Ángel Fernández Ordóñez , a Socialist appointee.

As Madrid and the euro zone get ready to pump as much as €100 billion into Spain’s struggling savings banks, one of the biggest questions is whether taxpayers yet again have to pick up the whole tab for saving failing lenders, The Wall Street Journal Brussels Beat blog reported. The answer to this question has come out in small slices over the past week, and it seems that the final word on the issue may still be out.

There are two schools of thought about the government of Mariano Rajoy, The Wall Street Journal Agenda blog reported. One view, which one tends to hear from euro-zone policy makers including senior German politicians, is that the Spanish prime minister already has impressive achievements to his name after six months in office.

The European Union plan to impose losses on the holders of Spanish subordinated debt that need recapitalising has unsettled some fixed income investors, who fear, following the experience of Ireland, that this could become a blueprint for all eurozone banks, International Financing Review reported. Any burden-sharing exercise will mostly affect Spanish retail investors, who bought almost two-thirds of subordinated debt – chiefly preferred shares - sold by the likes of Bankia, CatalunyaCaixa, NovaCaixaGalicia and Banco de Valencia.

Spanish Prime Minister Mariano Rajoy announced new austerity measures Wednesday that should help Madrid cut its budget deficit by €65 billion ($80 billion) through to 2015, and warned the euro-zone's fourth-largest economy may not grow at all next year, The Wall Street Journal reported. In an impassioned address to parliament, Mr.

The private sector will be involved in bearing the cost of restructuring Spain's banks, but senior bank bondholders and depositors will not be affected by such burden-sharing, a spokesman for the European Commission said on Wednesday, Reuters reported. "Once we have a clear sense of the costs of restructuring ... we will work on the principle that private sector participation in the distribution of losses is necessary in order to ensure that taxpayers do not have to shoulder an unfair burden," Simon O'Connor, a spokesman for the European Commission, told a regular news briefing.