Spanish stocks plunged, pushing the IBEX 35 Index to its lowest level in more than three years, as a selloff in banks sent the benchmark measure tumbling.
Banco Santander SA, the country’s largest lender, lost more than 3 percent as Moody’s Investors Service prepared to concluded its review of the euro area’s banks. Sacyr Vallehermoso SA dropped 4 percent as a report showed manufacturing in Spain contracted. Red Electrica Corp. slid 2.2 percent as Bolivia seized the company’s local assets.
The IBEX 35 dropped 2.6 percent to 6,831.9 at the close in Madrid, its lowest level since March 2009. The gauge has sunk 20 percent this year, the worst performance of 24 developed markets tracked by Bloomberg, as the Spanish economy entered its second recession since 2008.
“The euro-zone debt crisis has become center stage once more with Spain the focus of attention,” said Ted Scott, director of global strategy at F&C Asset Management in London, in a note to clients. Spanish bond yields “reflect the diminishing effect of the European Central Bank’s liquidity program and increasing concerns about the Spanish economy and especially its banking sector.”
Spain’s benchmark 10-year bonds fell today, pushing yields eight basis points higher to 5.85 percent.
Spain, Europe’s fifth-largest economy, has become the focus of policy makers as they attempt to contain the region’s sovereign-debt crisis and Prime Minister Mariano Rajoy struggles to quell speculation that the country will need a bailout.
De Guindos Meets Almunia
Economy Minister Luis de Guindos was said to have met Competition Commissioner Joaquin Almunia today as the country devises steps to clean up its banking industry.
De Guindos and Almunia were meeting in Brussels, an Economy Ministry spokeswoman said yesterday, who asked not to be named in line with policy.
Santander lost 3.3 percent to 4.56 euros, its lowest price since March 2009. Banco Bilbao Vizcaya Argentaria SA, Spain’s second-largest bank, tumbled 3.3 percent to 4.94 euros and Bankia SA, the third biggest, sank 5.1 percent to 2.46 euros.
Moody’s is scheduled to conclude its reviews of western-European banks by the end of June, according to a statement in April. The rating company said in a March statement that it planned to conclude the reviews last week.
Spanish Lenders’ Cash
Separately, Spanish banks are running out of cash borrowed through the European Central Bank’s three-year loan program, diminishing their “firepower” to buy government bonds, according to strategists at Royal Bank of Scotland Group Plc.
The lenders have used up 42.3 percent of the funds they received, Harvinder Sian, Biagio Lapolla and Simon Peck, interest-rate strategists in London, wrote in a note to clients on April 30. They cited the ECB’s December-to-March data.
Spanish construction-related companies fell today as data showed manufacturing in Spain contracted in April. A factory gauge based on a survey of purchasing managers slipped to 43.5 from 44.5 in March, according to London-based Markit Economics. A reading below 50 indicates contraction.
Sacyr Vallehermoso declined 4 percent to 1.31 euros and ACS-Actividades de Construccion & Servicios SA lost 3.8 percent to 13.33 euros. Abertis Infraestructuras SA slid 1.4 percent to 11.53 euros.
Elsewhere, Red Electrica retreated 2.2 percent to 32.16 euros after Bolivia’s President, Evo Morales, said he will nationalize the Spanish grid operator’s unit in the South American country. The decision occurred two weeks after Argentina expropriated oil producer YPF SA from its Spanish parent Repsol YPF SA.