Stockmarkets calmer after Spain bank bailout

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Stockmarkets calmer after Spain bank bailout

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European stockmarkets were calmer on Tuesday morning following the European Union’s 100 billion euro bailout of Spanish banks.

Monday’s euphoria was short lived after borrowing costs for both the Madrid government and Italy rose once again.

European Commission Vice President Olli Rehn hoped the bailout would stop the risk of contagion to the rest of the eurozone.

“It is intended to be a very clear signal that the Euro area is willing and able to tackle the remaining challenges and in this context Europe is standing by Spain,” said Rehn.

But some analysts doubt whether 100 billion euros will be enough to help Spain’s banks recover from a devastating property crash.

Brussels wants Madrid to create so-called “bad banks” so lenders can park their toxic property loans to keep them separate from their profitable businesses.

Despite the bailout, Spain’s economy is still in for a tough year with its 24 percent unemployment rate expected to rise further.