Spain GDP Contracts in the First Quarter | IFCM
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Spain GDP Contracts in the First Quarter - 17.5.2012

The single currency remains under pressure against the dollar, having touched yesterday a four-month low 1.2681. In Asian trading hours and at the beginning of the European trading session today the pair have been fluctuating around 1.2700 amid Spain’s GDP growth data reading and Spanish debt auction. The official data showed today that the nation’s GDP contracted by 0.3% in the first quarter of the year, following an equal 0.3% drop in the last quarter of 2011. Annualized growth pace reached minus 0.4%, the first drop since the first quarter of 2010, compared with the previous 0.3% annualized gain in the fourth quarter of 2011.
Today Spain’s Treasury sold 2.5 billion euros of bonds maturing in 2015 and 2016 having to offer higher required yields in comparison with previous auctions. Prime Minister Mariano Rajoy said recently that Spain is facing risk of loosing access to debt markets and that spending cuts is exactly what could protect the nation. The yield of the Spanish 10 year bonds is still elevated – at around 6.3% after rising yesterday above 6.5%, the highest since November 2011. At the same time the spread with German government securities yielding 1.46% has widened considerably in May, surging to almost 500 basis points.
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