Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.40%3.37%
15 yr fixed2.67%2.67%
5/1 ARM2.84%2.87%
30 yr refi3.43%3.45%
15 yr refi2.71%2.70%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 18,547.30 17.88 0.10%
Nasdaq 5,260.08 15.48 0.30%
S&P 500 2,186.90 4.26 0.20%
Treasuries 1.55 0.01 0.91%
Data as of 5:33pm ET
Company Price Change % Change
Bank of America Corp... 15.35 0.17 1.12%
Chesapeake Energy Co... 6.46 0.37 6.08%
Best Buy Co Inc 39.23 6.43 19.60%
Ford Motor Co 12.42 0.06 0.49%
General Electric Co 31.23 -0.09 -0.29%
Data as of 4:02pm ET

Sections

Domino's has aggressively courted Millennial stomachs by upping its online game and allowing young people to order via texts and also tweets. The game plan has paid off. Half the company's U.S. sales are digital. More

Due to slower than expected growth and lower than expected revenue, the nonpartisan Congressional Budget Office projects this will be the first year since 2009 that the annual deficit will come in higher than the prior year. More

Wells Fargo charged some student borrowers illegal fees, according to the Consumer Financial Protection Bureau. Affected customers will receive refunds. More