Spanish and Italian bond prices have continued their decline as G20 leaders told European politicians responsibility for the debt crisis lies with them.
Finance chiefs at the G20 meeting today in Washington put pressure on Europe to solve the two-year eurozone crisis, which they labelled the largest drag on global economic growth, Bloomberg reports.
At midday, Spanish 10-year bond yields had risen three basis points from 5.91% to 5.94%, and Italian 10-year yields had risen six basis points, from 5.58% to 5.64%.
Spanish 10-year notes soared to above 6% on Monday as fears over the health of Europe's fourth largest economy accelerated.
However, a Spanish bond auction yesterday provided some relief after the nation managed to sell all the €2.54bn of bonds on offer, with demand higher than at the previous sale.
Today the Spanish Prime Minister Mariano Rajoy said the planned €10bn of painful spending cuts were necessary, and warned its government had no spare cash after spending it all over the last few years, the Telegraph reports.
Canadian and Australian representatives at the G20 summit joined the International Monetary Fund and the US in ramping up pressure on Europe to solve the crisis as it spreads to Spain, according to Bloomberg.
IMF chief Christine Lagarde said her organisation must only serve as an "emergency backstop", adding Europe must protect itself, boost economic growth and slash debt levels.
Lagarde is seeking more than $400bn in new reserves to increase a lending capacity of about $380bn and this week won promises of support from Japan to Denmark. She wants the money to help insulate the international economy from dangers such as European contagion, high unemployment and rising oil prices.
In a draft statement, the G20 members acknowledged that while stress had increased recently, there are signs of a modest global recovery and tail risks have started to recede.
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