Spain is battling to avert a fully-fledged sovereign rescue after borrowing costs spiralled out of control, with dangerous knock-on effects in Italy and Eastern Europe.

© ReutersA worker sweeps outside Madrid's bourse on Monday.
The yields on closely-watched two-year debt surged by 78 basis points to a modern-era high of 6.42pc, leaving it unclear how long the country can continue funding itself. Italy's two-year yields vaulted to 4.6pc.
"We can't keep going like this for another 15 days," said Prof Miguel Angel Bernal from Madrid's Institute of Market Studies. "The European Central Bank has to bring out its heavy artillery."
Andrew Roberts, credit chief at Royal Bank of Scotland, said the dramatic spike in short-term borrowing costs marked a key inflexion point in the crisis, replicating the pattern seen in Greece, Ireland and Portugal as they lost access to market finance. "We are fast approaching the endgame," he said.
Exchange clearer LCH Clearnet raised margin requirements on both Spanish and Italian bonds, a move that will automatically cause further selling by some funds.
Comment: They try to make their activities sound so innocuous and benign when in actuality what they do is so evil:
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