The yield on Spanish government debt is racing higher this afternoon despite the move by the European authorities to spend €100bn bailing out the country's banking system.
Spanish Prime Minister Mariano Rajoy hailed the rescue package as a victory for the government, but the plaudits were short-lived, with bearish traders quickly turning on Spanish and Italian government debt.
By 13:20pm, the yield on benchmark 10-year Spanish debt was 23 basis points higher at 6.4%, while Italian yields were up around 6%, hitting week highs.
Yields on safe haven bonds were also marginally higher, but not enough to prevent spreads widening, with German bunds up 0.015% at 1.331%, and UK gilts up 0.019% at 1.654%.
Yields climbed as Rajoy declared the €100bn bailout a 'credit line' for the country's banking system.
Spain is the largest economy yet to seek aid from the European authorities, with Ireland, Greece and Portugal having already received bailouts.
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