Show Hide image

Ireland bailout fails to calm eurozone market jitters

Borrowing costs rise for eurozone countries with high levels of debt

The €85bn (£72bn) bailout of Ireland failed to quell anxiety that the crisis in the eurozone was deepening as bond yields in the euro region's most-indebted countries rose to records and the cost of borrowing for Ireland, Spain and Portugal jumped.

Ireland's borrowing costs shot as high as 9.6 per cent as the terms of its bailout by the International Monetary Fund and European Union were revealed.

Italy, Europe's biggest debt market, saw the biggest rise in its borrowing costs for the year, with a jump of more than 10 per cent.

Spain also saw the biggest rises in borrowing costs on Monday, swiftly followed by Belgium, another country with a high level of debt.

Equity markets in both Europe and the US fell, with the Dow Jones Industrial Average and the FTSE Eurofirst 300 both down 1.2 per cent. The euro fell more than 1 per cent against the dollar to $1.309.

European governments had sought to stem market losses by agreeing to the aid package for Ireland but the bailout failed to dent fears of contagion across the eurozone.

Speculation was now rife that the European authorities may be left with little option but to embark on large-scale quantitative easing to try to bolster market sentiment.