Europe, Spain | featured news

Three people linked to al Qaeda have been arrested in the south of Spain, one in possession of explosives they planned to use in attacks in either the Iberian country or other European nations, Interior Minister Jorge Fernandez Diaz said on Thursday.

At the start of another critical week for the euro, the head of the finance ministers that use the currency, Jean-Claude Juncker, reinforced expectations Monday of an initiative to lower Spain’s borrowing costs, which had hit alarming heights.

Spain has for the first time conceded it might need a full EU/IMF bailout worth 300 billion euros ($366 billion) if its borrowing costs remain unsustainably high, a euro zone official said.

Spain's 17 regional governments are a big part of the country's financial problems. Like the regional savings banks, they are victims of the country's property boom and bust. During the boom years, regional government tax revenues were swelled by stamp duties on property sales, and by income taxes paid by immigrants that came to work on the country's construction sites... Then the bust came...

Spain’s borrowing costs rose to record levels for a third consecutive trading day on Monday on concerns that a deepening recession and the financing problems of its regions would force the government to seek a full-fledged bailout.

A French man and one of his three children died after they jumped along with his wife off a 164-foot cliff into the sea to flee a raging wildfire that forced them out of their car just as they were about to cross the Spanish border into France at the end of their vacation, officials said Monday.

German leaders have a message for their anxious neighbors: Perhaps the euro crisis isn’t so dire after all. A growing chorus of German policymakers say they have years to resolve the euro zone’s problems, even as Italy and Spain press for urgent action to bring down their borrowing costs, which are approaching new heights.

Ten-year bond yields rose above 7 percent and shorter-term issues also sold at higher cost, raising fears that recent European accords were not enough to stem the debt crisis.

The Spanish government's most recent reforms will slash 56.4 billion euros ($69 billion) from the public deficit in the next two and a half years, an official document showed on Saturday, leaving a gap to be filled by taxes on energy.

Irene Fernandez lost her job with Spain's postal service five months ago, a victim of government spending cuts. Since then, she's been getting by on spending money from her mother and the $530 a month she earns grooming dogs for neighbors.