Spain, Europe Debt Crisis | featured news

Spain's new government said on Friday the public deficit for 2011 would come in at 8 percent of gross domestic product, well above a target of 6 percent, and announced income and property tax hikes and a civil servant wage freeze in response.

Italy and Spain have not asked to be rescued by the International Monetary Fund, the head of the lender said on Monday as she urged European leaders to quickly solve the region's festering debt crisis.

Asian stocks slumped Friday after a spike in Spanish government borrowing costs added to the uncertainty over Europe's debt crisis and investors braced themselves for China.

Moody’s Investors Service downgraded Spain’s credit rating Tuesday and warned that France’s rating could also be at risk, citing both nations’ vulnerability as Europe struggles to manage its persistent debt crisis.

Fitch on Friday cut Spain's credit ratings by two notches, just a few minutes after downgrading Italy, saying the intensification of the euro zone debt crisis has had a negative impact in the entire region.

Italy and Spain pass new measures as they battle to control their debts while Greece steps up its austerity plans.

Several European countries that banned short-selling have extended the prohibition until the end of September. When concerns about European banks’ exposure to Greek debt sent their stocks plummeting two weeks ago, market regulators in Belgium, France, Greece, Italy and Spain stepped in to prohibit traders from betting on the decline in a share’s price.

The demonstrations have overshadowed regional and municipal elections that were expected to result in a defeat for the governing Socialist Party.

Fueling the demonstrators’ anger is the perceived failure by politicians to alleviate the hardships imposed on a struggling population by a jobless rate of 21 percent.

Portugal was put on notice on Tuesday that its credit rating could be cut and fellow euro zone debtor Spain had to pay more to issue new debt, suggesting the currency bloc's crisis will rage unabated in 2011.