Bloomberg: Euro tremors risk market respite on Spain-Italy

04 February 2013

Europe's political tremors risk spoiling the region's market calm, with corruption allegations buffeting Spanish Premier Mariano Rajoy, and Italy's Silvio Berlusconi narrowing the front-runner's lead as elections loom.

In Madrid, opposition leader Alfredo Perez Rubalcaba said Rajoy should resign after reports in El Pais newspaper that he or members of his People’s Party received illegal payments. Rajoy said on February 2 that the allegations are unfounded and stem from unknown people trying to damage his party.

In Italy, a poll showed billionaire media magnate Berlusconi closing the gap with leader Pier Luigi Bersani to 5 percentage points, as he undertook a media blitz. The surge by Italy’s former premier, who was pressured to resign in 2011 amid soaring bond yields, threatens Bersani’s ability to win a majority even if he remains ahead in the polls. Berlusconi has pledged to upend the overhaul measures of his successor, Prime Minister Mario Monti, and blames Germany for overseeing destructive austerity measures in Europe. Voting takes place on February 24-25.

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