Spanish deny report of €1bn bank run

Reports of depositors withdrawing funds from Spanish banks were met with hasty denials from the country\'s government yesterday, as policymakers rushed to scotch talk of bank runs spreading across the continent.  Shares in Bankia, the Spanish lender that combined many of the country\'s troubled regional lenders, fell 9.7 per cent to €1.493 after reports in Spanish newspapers that Spaniards had withdrawn €1 billion (Dh4.66bn) from the nationalised bank in the past few days. However, Fernando Jiménez Latorre, Spain\'s deputy economy minister, denied the report in the tabloid El Mundo, telling Bloomberg News that the country had no concerns about capital flight from Spanish banks. Later in the day, Bankia said that the withdrawal was \"seasonal\" and was not a cause for concern. The reports followed a warning to Greek party leaders from Karolos Papoulious, the country\'s president, that €700 million had left the country\'s banking sector since May 7. Markets were still betting that a Greek exit from the euro zone was imminent as previous measures to stem the crisis started to come undone, wrote Steen Jakobsen, the chief economist at Saxo Bank, in a note to clients. \"We have moved from a situation where no one publicly wanted to talk about the Greek exit, to one where everyone is making plans for the reintroduction of the drachma,\" he said. \"The path from here is very uncertain … with the G8 [Group of Eight] meeting and politicians finally realising they called off the crisis way too soon.\" Uncertainty surrounding Greece\'s future in the euro zone hammered European stocks yesterday, as markets weighed the possible outcomes from a rerun next month of this month\'s parliamentary elections. Brent crude futures fell US$2.40 to $109.03 per barrel, the first time they have fallen below $110 per barrel since January. The FTSEurofirst 300 Index fell 1 per cent to 982.05 as most European indexes declined. The MSCI Emerging Markets index dropped 2.3 per cent to 924.26. Later in the day, Spain\'s borrowing costs rose, with yields on 10-year government bonds rising to 6.34 per cent after a bond auction. Worries from Greece were felt as far afield as Russia, where the Micex index slid 2.5 per cent to enter a bear market, having fallen 20.5 per cent from its March highs. The UAE\'s markets fared better, with the Dubai Financial Market General Index rebounding 0.6 per cent to 1,475.58, and the Abu Dhabi Securities Exchange flat at 2,467.85. But as markets crumbled, ratings agencies warned of greater pressures on big lenders to shore up capital, further reducing their capacity to lend to euro-zone economies.