Sovereign Debt Risk Rises as Spain Bank Woes Heighten Euro Alarm

The cost of insuring against a sovereign default in Europe surged as Greece’s political deadlock and Spain’s bank capital crisis heightened speculation the euro region may start to crumble.

The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments jumped 7.5 basis points to 293.5 at 3:15 p.m. in London, signaling deterioration in perceptions of credit quality. Contracts on Spain soared as much as 26 basis points to a record 543, according to Bloomberg data.