July 21, 2012- Global stocks, including Wall Street dropped on Friday. The euro also dropped to record lows after the area of Valencia in Spain, which is heavy in debt, asked for a bailout. The news increased investor fears that the government of Spain will look to the eurozone for a complete financial bailout.
The area of Valencia asked for help under a program of $22 billion that was passed this week that aims to help with regional finances in the country. Spain’s stock market, IBEX, dropped by nearly 6%, it biggest loss in one day for nearly two years. The country’s borrowing costs passed the 7% mark to 7.32%, which is considered unsustainable by economists.
On European economist said there was next to nothing that will stop the bond yields in Spain from increasing even more and that is a big concern for the entire region and investors.
The euro fell to record lows against Canadian, New Zealand and Australian currencies. The common currency hit multi-months lows against Swedish and Norwegian crowns. Against the Japanese yen, the euro hit an 11-year low.
Stocks in the U.S. broke a three-day streak of increases, while Europe’s markets extended their streak of losses. The European Central Bank announced it would no longer accept Greek bonds used as collateral, which added to the already big concerns about the debt crisis in Europe.