Spanish stocks declined to the lowest level in more than eight years amid concern the Mediterranean nation may have to seek a financial rescue and Greece may leave the euro currency union.
Bankia SA led a selloff in banking shares as the country’s 10-year bond yield climbed above 6 percent. Mapfre SA retreated 6.3 percent after reporting a 13 percent drop in first-quarter net income. Sacyr Vallehermoso SA, a property developer, slumped to the lowest price since at least October 1989.
The IBEX 35 Index dropped 2.8 percent to 6,812.7 in Madrid, its lowest since Oct. 2, 2003. The benchmark gauge has plunged 20 percent this year, the worst performance of 18 western European markets. The volume of shares changing hands on IBEX 35 companies was 44 percent higher than the average in the past 30 days, data compiled by Bloomberg showed.
“Investors worry about what will happen next, to the euro and to Spain,” said John Plassard, director at Louis Capital Markets SA in Geneva. “This should lead to increased market volatility over the coming weeks. Spain, as the icing on the cake, adds to concern with some voices fearing another revision of its deficit targets this year.”
The IBEX 35 dropped 0.8 percent yesterday after Antonis Samaras, the leader of Greece’s biggest political party, abandoned efforts to form a government, leaving the mandate to pass to left-wing leader Alexis Tsipras, leader of the anti-austerity Syriza group.
Spanish Bond Yields
The cost of insuring against a Spanish default surged to a record on concern a bailout of Bankia, the nation’s third-biggest lender, won’t avert a banking crisis triggered by bad real-estate loans. Ten-year bonds fell, pushing the yield above 6 percent for the first time since April 27.
Bankia tumbled 5.8 percent to 2.13 euros, its lowest price since it listed its shares in July. JPMorgan Chase & Co. downgraded the Spanish lender to underweight, the equivalent of a sell recommendation.
Meanwhile, Spain is preparing to “partially nationalize” the parent company of the Bankia group today after European markets close, ABC reported on its Website.
Banco Santander SA, Spain’s largest lender, dropped 4.5 percent to 4.64 euros and Banco Bilbao Vizcaya Argentaria SA retreated 4.7 percent to 5.01 euros.
Banco Popular Espanol SA slid 4.7 percent to 2.15 euros after KBW Inc. said the bank may post a 1.93 billion-euro ($2.5 billion) loss this year as a result of new real-estate provisions required by the government.
Mapfre retreated 6.3 percent to 1.94 euros. The insurer reported a 13 percent drop in first-quarter net income to 271.4 million euros. That still beat the average analyst estimate of 250.3 million euros in a Bloomberg survey.
Sacyr Vallehermoso slumped 5.8 percent to 1.17 euros, the lowest price since at least October 1989, according to data compiled by Bloomberg.
Gas Natural SDG SA, Spain’s largest natural gas company, declined 3.2 percent to 9.99 euros after Exane BNP Paribas cut its price estimate for the stock by 15 percent to 14 euros.