What started out a rally turned into a rout today, with markets falling across the euro area:FTSE 100: +0.00%
CAC 40: -2.05%
FTSE MIB: -1.86%
IBEX 35: -2.42%
Despite decent Spanish and French bond auctions, markets extended midday losses to close down again, as optimism about Spain continues to dry up.
While a majority of economists polled by Reuters still think a troika-led bailout of Spain is unlikely, equities are tanking and investors wax sceptical of the progress that can be made by EU officials to stem the tide.
Further, uncertainty about the upcoming French presidential elections—where a far more radical Francis Hollande (at least compared to incumbent Sarkozy) is leading in the polls—may be influencing perceptions of EU leaders’ willingness to cooperate in the future.