Spanish Bank Rescue Hits Euro (Is Spain the next European domino to fall?)

Wall Street Journal ^ | 05/24/2010 | Bradley Davis

[SeekAndFind]

The euro dropped sharply after Spain's rescue of a small, failing savings bank over the weekend revived concerns about the euro-zone economy.

After strengthening last week as investors unwound trades against the euro, the common currency is starting the week with traders again piling on anti-euro bets.

"An immediate slump leaves the onlooker with the impression that [the euro] may well have fallen out of the wrong side of the bed after a well-deserved nap after a four-year low last week," said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn.

The euro recently was at $1.2371 from $1.2574 late Friday in New York. The dollar was at 90.24 yen, from 89.99 yen, while the euro was trading at 111.67 yen from 113.16. The U.K. pound was at $1.4386 from $1.4484. The dollar was at 1.1580 Swiss francs, from 1.1490 francs.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 86.369 from 85.348.

Spain's takeover of the small savings bank likely wasn't indicative of a larger problem that could topple the financial system, analysts said, but still focused investor attention again on the challenges faced by a slow-growth, high-debt euro zone.

"News over the weekend that the Bank of Spain has taken over a small regional lender appears to be feeding market worries about costs to sovereigns of supporting lenders," Credit Suisse analysts said.

[RobRoy]

>>Is Spain the next European domino to fall?<<

For crying out loud. This headline could have been written last year. Anyone paying attention has been watching Spain CLOSER than Greece for the same reason one would watch California closer than South Dakota.

[Army Air Corps]

Which of the remaining PIIGS countries will be in line for a handout after Spain goes begging?

[RobRoy]

Portugal should be next.

[OB1kNOb]