Spanish rising debt costs spook markets

The equity markets almost on a global basis, have fluctuated between "Risk on" and "Risk off" for many months now, making the life of a fund manager very difficult, as individual shares and sectors will drop with the herd, whether they are performing or not.

At the moment the market is Risk Off and equity markets are weak as investors worry about the prospect of a Eurozone country needing bailout money.

Why would this happen?

Well Spain has already requested funds that would specifically help to recapitalise its ailing banks, which has been rubber stamped up to £78 billion and was received quite positively by the markets because a less fragile financial system is one less Eurozone problem to worry about.

On top of this however a Spanish regional authority, Valencia, has asked for financial assistance from the Spanish Government and where is this going to come from? Possibly Spain asking for a full scale bailout over and above the funds set aside to deal with their banking crisis.

This has sent the cost of funding Spanish debt to very high levels and markets are now focusing on this aspect of the Eurozone crisis.

The Euro is at a recent low against many currencies and the pound is seen as a safe haven, which is hindering the UK export market.