Europe, Euro Zone | featured news

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.

Markets and the euro rose after Mario Draghi reportedly told a conference in London that the central bank would “do whatever it takes to preserve” the currency.

Greece is unlikely to be able to pay what it owes and further debt restructuring is likely to be necessary, three EU officials said on Tuesday, a cost that would have to fall on the European Central Bank and euro zone governments.

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.

The European meltdown is weighing heavily on the U.S. economy, with states that rely heavily on exports most at risk from the deepening crisis overseas. An analysis by Wells Fargo estimates that Utah and West Virginia economies face the biggest risk from the problems in the eurozone, while many Western states including Wyoming and Colorado are unlikely to see much impact.

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.

BERLIN —Greece’s new leaders have had only a month to confront their country’s dismal tangle of economic problems, but some in Europe think the troubled Mediterranean country is up against a hopeless task.

Credit rating agency Moody's cuts Italy's standing and warns the country is likely to see a sharp rise in borrowing costs.