Madrid’s stock market index demonstrated the uncertainty in the financial markets about whether a massive emergency package intended to stabilise the euro will be effective.
On Monday it rose 14.5 percent, it finished Tuesday’s session down 3.3 percent.
Share and bond markets turned cautious with investors worried that the plan is not a long-term solution.
Towards the end of Tuesday the European stock markets did trim their losses as US shares edged higher on Wall Street but traders said the roller coaster is set to continue.
The euro failed to hold its gains of Monday and slipped to hover around $1.27.
And the fact that the European Central Bank had agreed to start buying euro zone government bonds is being seen as a blow to its independence.
Robert Halver, Head of Research at Baader Bank in Frankfurt said: “I guess it’s difficult for the ECB to be independent in the long-term because the other countries have pushed enormously and the ECB has to do their work in getting inflation down and that’s not good news.”
Meanwhile the German cabinet quickly approved its 123 billion euros in loan guarantees to support the euro, responding to criticism that Berlin’s footdragging stoked market tension and boosted the final cost of the bailout.