Spain

Senior Spanish officials are holding out the possibility that the government might need to ask Europe for a financial bailout, but gave no indication that such a decision was imminent, The Wall Street Journal reported. Finance Minister Luis de Guindos said in an interview published Sunday that Spain is in no rush to request a European bailout and can afford to wait until more information regarding a possible European assistance program comes to light. "When we know the details [of the aid program], we'll have a more precise calendar," Mr. de Guindos was quoted as saying.

Spain slid deeper into recession in the second quarter as a tough new round of austerity to head off the budget crisis that threatens the euro took effect both on overall demand and the price consumers have to pay for goods, the Irish Times reported. The first official numbers on gross domestic product showed the economy shrank 0.4 per cent from the previous quarter after contracting 0.3 per cent in the first three months of the year. The economy was 1 per cent smaller than a year earlier.

Europe’s quest to sever the link between Spain’s fiscal fate and its failing banks hinges on an obstacle-strewn race to hand greater powers to the European Central Bank, Bloomberg reported. Until euro-area leaders overcome German doubts, ECB concerns, and turf battles everywhere, Spain will remain on the hook for a bailout of its banks of as much as 100 billion euros ($121 billion). Policy makers want to protect taxpayers from losses so potentially big they risk bankrupting governments, as happened in Ireland and Iceland.

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.