Spain Stocks Close Sharply Lower Ahead Of ECB Loan Expiry

Spanish stocks closed sharply lower Tuesday on concerns related to the Thursday expiry of EUR442 billion in European Central Bank one-year loans to euro-zone banks.

These concerns, fueled by a Financial Times report that Spanish banks are angry the ECB isn't renewing this liquidity scheme, contributed to a 5% drop in Spain's blue-chip IBEX-35 index to 9,160.4, the largest decline among Europe's major indexes.

Spanish banking giant Banco Bilbao Vizcaya Argentaria SA (BBVA) closed down 7.2%, while its peer Banco Santander SA (STD) ended down 6.8%.

Banks across the euro zone, but in Spain in particular, have faced increasing difficulties in recent weeks getting financing in international capital markets.

In other signs of financial stress Tuesday, credit default swaps on Spain hit a record level of 277 basis points, while the yield spread for Spanish 10-year bonds over German bunds hit 210, close to the 226 record level it hit a couple of weeks earlier.

-By Jonathan House, Dow Jones Newswires, +34 91 395 8121; jonathan.house@dowjones.com

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