Spanish loan rate tops 7.0% danger point

Spanish 10-year borrowing rates surged again above the danger level of 7.0 percent on Monday, ahead of a meeting of eurozone finance ministers being held against a backdrop of renewed market pressures. The yield on 10-year bonds rose to 7.026 percent from 6.912 percent late on Friday. A rate above 7.0 percent is considered to put a eurozone country at risk of needing a debt rescue. Analysts said they did not expect the Eurogroup meeting of eurozone finance ministers in Brussels on Monday to make significant progress on issues arising out of an EU summit 10 days ago. That summit was presented by EU leaders as a breakthrough in structuring help for Spanish banks, by separating it from national debt, and for establishing a banking union. The spread or the difference between the rate Spain must pay to borrow for 10 years and the German rate -- the benchmark for the eurozone -- widened to 5.66 percentage points. The Italian 10-year rate also rose to 6.113 percent from 6.016 percent. The yield on 10-year German debt fell to 1.312 percent from 1.326 percent. \"Investors doubt the capacity of the two countries (Spain and Italy) to clean up their public finances, given the worsening of the economic situation,\" BNP Paribas bond strategist Patrick Jacq said. \"From now on the two lifelines represented by the European summit at the end of June and the meeting of the European Central Bank last week, are behind us. The market does not expect much progress at the Eurogroup meeting.\" The ministers were expected to delay most of the decisions on Greece, which wants longer to meet rescue terms, on Cyprus which wants help for its banks, and on Spanish banks, to a meeting on July 20.