Spain said it is losing access to credit markets and appealed to its European partners to help revive its banks, a distress signal sure to intensify global pressure on Europe to move faster to the aid of its fourth-largest economy.
Madrid's dramatic statement - that its borrowing costs had become prohibitive due to a banking crisis - came as the Group of Seven major economies, afraid of a possible run on Spanish banks, held urgent but inconclusive talks on the euro zone.
As if to underline the dangers to the entire 17-nation zone of inaction, Moody's Investors Service cut the credit ratings of several German banks on Wednesday, citing the greater risk of further shocks stemming from the region's debt crisis. Germany is the single currency's strongest economy.
"The risk premium says Spain doesn't have the market door open," Spanish Treasury Minister Cristobal Montoro said. "The risk premium says that as a state we have a problem in accessing markets, when we need to refinance our debt."
Asian shares nudged up on Wednesday following sharp falls last week, although concerns about Spain and that a Greek election on June 17 could lead to Athens' departure from the euro area capped the gains.
The European Central Bank holds its monthly policy review later on Wednesday and could indicate a readiness to cut rates soon, although it is not expected to come up with any immediate initiatives to resolve the crisis.
Read more: http://www.reuters.com/article/2012/06/06/us-eurozone-idUSBRE8530RL20120606
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