Markets turn red as Spanish bond yields near record highs

Spanish government bond yields were climbing back towards record highs after the European Central Bank (ECB) shot down plans in Madrid to recapitalise parts of its banking system. Madrid had suggested recapitalising stricken-lender Bankia by injecting €19bn of sovereign bonds into its parent company, which could then be swapped for cash at the ECB's three-month refinancing window. This would avoid Spain having to tap the bond markets for cash. However, the ECB told Madrid a proper capital injection is needed for Bankia, with its plans in danger of breaching an EU ban on central bank f...