Spain

France and Spain have cleared major funding tests, steadying volatile markets and giving some much-needed cheer to the embattled eurozone, The Guardian reported. Paris and Madrid secured €13bn (£10.8bn) of funding between them in bond auctions at significantly lower interest rates than last year, despite a downgrade by the ratings agency Standard & Poor's last week that sparked fears of a run on the euro and the collapse of several banks. Stock markets rose on the news, with the FTSE 100 finishing the day up 38 points at 5741.15, while the German Dax rose 1%.

Spain says it expects its banks to set aside up to €50bn in further provisions on their bad property assets as part of a new round of reforms for the country’s financial sector, the Financial Times reported. Luis de Guindos, economy minister in the centre-right government that took office two weeks ago after defeating the Socialists, said on Wednesday it was essential that the banks clean up their balance sheets without imposing a burden on the treasury. The €50bn figure, equivalent to about 4 per cent of Spain’s GDP, is higher than private expectations by bankers.

In a new sign of a Spain's deepening financial crisis, the regional government of Valencia on Wednesday said it was a week late in repaying a €123 million ($160 million) debt to Deutsche Bank AG, The Wall Street Journal reported. A spokeswoman for the Valencia government said the region had assistance from Spain's central government in Madrid in finding a solution to its liquidity crunch, but said Madrid didn't provide extra funds or a guarantee. The spokeswoman said the central government was "sensitive" to Valencia's difficulties, but declined to elaborate.

Registered unemployment in Spain, where almost half of young people are out of work, rose for a fifth month in December as the euro area's fourth-largest economy contracted, the Irish Times reported. The number of people registering for unemployment benefits rose 1,897 to 4.42 million, the labour ministry in Madrid said in an e-mailed statement today. In November, it surged 59,536. Spain's economy contracted in the final months of the year as tourism and exports, the drivers of its first-half recovery from a three-year slump, weakened, the Bank of Spain said on December 29th.

The Spanish government said Monday it will introduce more austerity measures this week on top of a swath of spending cuts and tax increases approved last week, as it scrambles to contain a budget deficit that may have surpassed 8% in 2011, The Wall Street Journal reported. The new measures are set to be approved at a Cabinet meeting Thursday, Budget Minister Cristobal Montoro said Monday during an official event in Madrid. He didn't specify what measures the government plans to introduce.

Spain's central bank said Wednesday that it has agreed to hand over seized savings bank Caja de Ahorros del Mediterraneo to Banco de Sabadell SA, in a heavily assisted deal that will position the midsize Catalan bank as the country's fifth-largest lender, Dow Jones Daily Bankruptcy Review reported. Under the terms of the deal, CAM will be handed over to Sabadell along with sweeping guarantees that will cover 80% of future losses tied to the lender's huge portfolio of real-estate loans and foreclosed properties over a 10-year period.

Spain's incoming prime minister, intent on curing the country's ailing banking sector, is considering cleanup plans that could dwarf the cost of previous efforts, including the creation of a state-funded "bad bank" to acquire toxic assets or a move to force banks to dramatically boost loan-loss reserves, people close to the situation say, The Wall Street Journal reported.

Spain's central bank said yesterday that it has seized small Valencia-based lender Banco de Valencia SA, the country's latest ailing bank to require state aid, as the sector struggles to digest the fallout from the collapse of a decade-long housing boom, Dow Jones Daily Bankruptcy Review reported. The Bank of Spain said that it will inject up to EUR1 billion ($1.3 billion) in capital and will grant a credit line of up to EUR2 billion to Banco de Valencia, which was partly owned by Spain's Banco Financiero y de Ahorros SA.

Top European Central Bank officials offered a skeptical appraisal of Europe's latest plan to solve its debt crisis, suggesting that the central bank may be forced to maintain the emergency measures it has adopted to keep the problems from spreading, The Wall Street Journal reported.

The Spanish government Thursday said it will use the country's deposit-guarantee fund to cover losses resulting from its banking industry clean-up, a move aimed at protecting its efforts to slash a gaping budget deficit, The Wall Street Journal reported. Spain has three separate deposit-guarantee funds, financed by annual contributions from the country's financial institutions but administered by the Bank of Spain.