Ireland and Spain reignite euro zone fears

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- Fears about Europe's debt crisis ramped up again Thursday, after Ireland's central bank unveiled a $46 billion bank bailout and Moody's downgraded Spain's credit rating.

In an effort to prop up Anglo Irish Bank, Ireland's central bank passed a $40 billion bailout that could be increased to as much as $46 billion in a severe stress scenario.

The bailout would increase the country's already massive budget deficit from a planned 11.75% of its gross domestic product, to a staggering 32% in 2010 -- about ten times the European Union guidelines for euro-zone members.

Spain's weak economy was also hit with bad news Thursday. Moody's Investors Service downgraded the country's credit rating one notch to Aa1 from Aaa. Both are considered investment grade ratings, but a downgrade signifies Moody's outlook for the country's economic growth is gloomier than in the past.

Over the next few years, Moody's expects Spain's economy to grow at a sluggish rate of only 1% annually. That poses a big challenge as the country tries to reduce its massive fiscal deficit and refocus its economy away from the construction and real estate sectors.

Both Ireland and Spain are a part of a group of peripheral euro-zone countries struggling to overcome massive budget deficits, nicknamed the PIIGS -- Portugal, Italy, Ireland, Greece and Spain.

After tumbling earlier in the session, European stock indexes recovered a bit to post only modest losses in midday trading. France's CAC 40 fell 0.9%, Britain's FTSE 100 slipped 0.2% and Germany's DAX fell 0.3%.

A surging yen once again pressured Japanese stocks, sending the Nikkei down 2%. Other Asian markets were mixed. The Hang Seng in Hong Kong lost 0.1%, while the Shanghai Composite rose 1.7%. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.90%3.85%
15 yr fixed3.07%3.00%
5/1 ARM3.14%3.02%
30 yr refi3.96%3.92%
15 yr refi3.12%3.10%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 18,232.02 -53.72 -0.29%
Nasdaq 5,089.36 -1.43 -0.03%
S&P 500 2,126.06 -4.76 -0.22%
Treasuries 2.22 0.03 1.37%
Data as of 10:07pm ET
Company Price Change % Change
Bank of America Corp... 16.75 0.05 0.30%
Apple Inc 132.54 1.15 0.88%
Hewlett-Packard Co 34.76 0.93 2.75%
AT&T Inc 34.71 -0.42 -1.18%
Microsoft Corp 46.90 -0.52 -1.10%
Data as of May 22

Sections

The record airbag recall and the GM ignition switch recalls has resulted in a huge percentage of cars on the road today having been recalled. More

The True Cost, a new documentary, chronicles the evils of the clothing industry and asks us to stop buying so much cheap stuff More

Sarah Kauss launched S'well to rid the world of plastic water bottles. In five years, she's sold 4 million of her stainless steel bottles. More