Smooth Spanish bond sale, but euro zone still besieged

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Smooth Spanish bond sale, but euro zone still besieged

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For once there was some good news from the eurozone debt crisis as Spain was able to sell many more government bonds than it expected at its latest debt auction on Thursday and did not have to offer investors too high a rate of interest.

That showed that Spain is now considered a safer bet than Italy in terms of paying back its debts.

But it was only a small positive and investors want to see more progress — a fact noted by Europe’s top central banker, Mario Draghi, who is urging politicians to “speak unambiguously”, and then “deliver” on their promises.

He told a conference in Berlin: “The decisions by the European Council summit, together with the six-pack approved recently by the European parliament, are a breakthrough for clear fiscal rules in our monetary union. But it’s not enough to restore financial markets’ confidence. It’s also required that investors be reassured that government debt will always be repaid and timely serviced.”

Confidence in major eurozone economies is now so eroded that there has been market talk of France losing its cherished AAA credit rating.

That caused the head of the Bank of France, Christian Noyer, to launch a tirade against the rating agencies.

He said: “A downgrade does not appear to me to be justified when considering economic fundamentals.”

“Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping,” he added.

Noyer accused the agencies of making decisions based more on politics than economics and called them “incomprehensible and irrational”.