Banks, Europe Debt | featured news

Spain’s borrowing costs soared Tuesday to levels that have sent other euro members into the arms of international lenders, calling into question the viability of a bailout deal for Spain’s banking sector even as other troubled countries were weighing whether they could make similar rescue arrangements.

Europe agreed Saturday to allow Spain to tap a rescue fund of up to (EURO)100 billion ($125 billion) to bail out its troubled banks, which are struggling under the weight of soured real estate loans after a Spanish housing bubble burst. Spanish Economy Minister Luis de Guindos said the country will reveal how much money it needs within coming weeks, after audits of its financial sector are completed.

Stocks closed out its best week of the year Friday, as investors played things close to the vest before the weekend when Spain is expected to request aid for its troubled banks.

The European Commission will propose far-reaching powers for regulators to deal with failing banks on Wednesday, a step towards the banking union the European Central Bank has demanded to secure the euro's future.

Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday, and the credit ratings of eight regions were cut.

Greece's president spoke of "fear that could develop into panic" at the country's banks in the weeks before fresh elections that could precipitate Athens exit from the euro zone.

Spain's government tried to plug a gaping hole in the country's banking system on Friday, but the fourth such attempt to tackle the fallout of a property crash fell short of expectations.

Spain's latest credit rating downgrade has thrown into sharp relief the need to revive a banking sector that could need another 100 billion euros to cover bad debts in order to avoid exposing another weak flank in the euro zone crisis.

The World Bank is moving to prop up the European banking system in response to the crisis in the region, echoing the steps it took during the 2008 world crisis and reflecting heightening fear that the euro’s problems are starting to crimp the global economy.

The Federal Bureau of Investigation plans to examine MF Global Holdings Ltd amid concerns about missing client funds at the futures brokerage, the Wall Street Journal said Tuesday, citing a person familiar with the matter.