Financial markets slide on fears over Spain, global outlook

Fitch predicts Italian economy to shrink by 2012 close

Financial markets slide on fears over Spain, global outlook

(ANSA) - Rome, August 28 - European financial markets slid on Tuesday amid concerns over the outlook for Spain and for the global economy. Spanish Premier Mariano Rajoy and European Council President Herman Van Rompuy were emphatic Tuesday that their meeting in Madrid did not concern an EU bailout for the troubled country. But weak data coming from Spain is raising concerns about its economic and financial future. Investors are also carefully watching the annual meeting of central bank governors that begins later this week in Jackson Hole, Wyoming, hoping to get some news on what the U.S. Federal Reserve has in mind to support economic growth. However, indications on what actions the European Central Bank has in mind will have to wait, as ECB chief Mario Draghi cancelled his trip to Jackson Hole due to a heavy workload in Europe. In Milan, the FTSE MIB index slipped by 0.13% to close trading at 14,993 on news Tuesday that ratings agency Fitch predicts the Italian economy will shrink by 1.9% this year, and show no growth in 2013. The FTSE Italia All-Share index closed down by 0.17% at 15,875. Investor concern nudged up the spread between Italian 10-year bonds and the benchmark German Bund. The spread closed at 450 basis points with a yield of 5.83%, up slightly from Monday when the spread closed at 436 basis points and with a yield of 5.71%. Other markets were weak in Tuesday's trading. Frankfurt closed down by 0.64% to 7,002.68 points; in Paris the CAC 40 index was down 0.90% to 3,431.55 points; Madrid's Ibex 35 lost 0.88% to reach 7,333.50; and London's FTSE-100 index was essentially unchanged, moving down only 0.02% to 5,775.71 points.

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