Markets fall despite Mariano Rajoy's Spanish election win
Share prices tumbled across Europe today despite the landslide victory for the markets' favourite party in Spain.
Mariano Rajoy's centre-right People's Party crushed the outgoing Socialist government and pledged to drive through tough reforms.
"Difficult times are coming," he said.
However, the bond markets continued to punish, with yields on its 10-year debts - effectively the interest rate which investors demand to lend to the country - rose again to 6.46%. That took it close to crisis-riven Italy and reflected concerns that Rajoy would be unable to steer the country back to health.
Shares on Spain's main index fell 3%, accompanied by falls of 2%-2.5% across the rest of Europe, partly due to negative comment on France from Moody's. The FTSE 100 index tumbled 110.41 points, or 2.06%, to 5252.53.
Analysts said the falls were sparked by renewed concerns about sovereign debt, not just in Europe but also the US. David Thebault at Global Equities, said: "Europe is not the only one with debt problems. In the US there's a political gridlock over th e nation's deficit."
Fears US politicians will be unable to thrash out a plan to cut its deficit sent US crude oil prices down more than $2 a barrel. London Brent crude fell over $1 to $106.50 a barrel.
