Banks give Madrid stocks a boost

2011-01-12 12:15

Madrid - The Madrid stock market climbed more than 3% in early trade on Wednesday, powered by a rise in banking shares and ahead of a critical Portuguese debt issue.

The Ibex-35 index of the 35 leading shares jumped 3.17% to 9 886 points by 10:25 am.

The eurozone's largest bank, Santander, soared 6.09% to €7.979 and Spain's number two bank, BBVA, was up 5.23% at €7.44.

"Investors will be especially attentive to the issue of Portuguese bond issue" on Wednesday, said the Spanish brokerage firm Renta 4.

Portugal makes a critical debt issue on Wednesday in a high-stakes gamble to avoid a bailout and another eurozone crisis, but the European Central Bank stands ready to support the market.

EU diplomats say Portugal has come under heavy pressure from several European countries to accept outside help amid concern that a fresh eurozone debt crisis might spread to Spain, a far larger economy.

For its part, Spain also plans its first long-term issues of the year on Thursday, aiming to raise €2bn to €3bn in five-year bonds.

The big fear is that if bond rates go too high, Spain could be forced to seek an international rescue - a crisis with global implications that would dwarf the Irish and Greek bailouts, and possible similar action in Portugal.