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Spain: Jobless falls, bond yields soar

Spain: Jobless falls, bond yields soar
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Spain’s unemployment rate fell in July for the fourth month running thanks to summer tourism, however it remains the highest in Europe.

The registered jobless rate fell by 1.02 percent compared with June but there are still 4.08 million Spaniards without work.

In the second quarter the rate was 20.9 percent of the workforce according to the National Statistics Institute. That was down 21.3 percent from the previous quarter.

Unemployment fell in all sectors of the economy, except agriculture.

The jobs figures provided some good news on the Spanish economy which is otherwise showing signs of slowing.

Prime Minister Jose Luis Rodriguez Zapatero said on Tuesday that he has postponed his holiday to monitor the economy after Spain’s borrowing costs shot up – along with those of Italy – on fears they may need a bailout.

However economist Miguel Murado dismissed that idea: “There is nothing in the Spanish or Italian economy that, at this point, predicts that they will be in need of a bailout. They won’t, we don’t have any reason to believe that right now”.

The Italian authorities have called emergency talks on the situation.

On Thursday Spain faces a key test of whether investors want to buy its government bonds when it plans to auction 3.5 billion euros worth.

As an indication of the state of Spain’s economy, a purchasing managers’ survey this week showed manufacturing activity shrank in July for the third straight month.

Economists polled by Reuters have forecast the country’s economy will grow by just 0.8 percent this year.