Spain expected to seek EU bailout

SPAIN might seek a sovereign bailout within days, financial analysts predicted yesterday, after the euro zone’s fourthlargest economy revealed a soaring debt outlook.

As signs gathered that Spain was entering the end-game, the EU economics chief, Olli Rehn, opened talks in Madrid with Economy Minister Luis de Guindos.

In the past week, Spain has unveiled an austerity budget for 2013 and revealed a lowerthan-expected price tag for saving its banking system, both items considered essential homework for a bailout.

Meanwhile, the financial and economic crisis is deepening.

Spain’s government revealed at the weekend that the cost of Spanish industry, in British manufacturing it steepened by an unexpectedly large margin.

Markit’s euro zone manufacturing PMI rose to 46.1 in September from 45.1 in August and above the preliminary reading of 46. That was its 14th month below 50, which divides growth from contraction.

Unemployment in the euro zone stayed at a record high in August, as official data released yesterday further highlighted the human cost of the bloc’s three-year debt crisis.

Still, investors largely shrugged off the data, taking fresh positions in European shares after suffering some hefty losses last week.

The surveys did little to alter economists’ view that central banks in Europe will probably have to take more action to boost their flagging economies, although probably next month rather than this week.

Britain’s manufacturing sector shrank more than expected in September as export orders fell and costs soared, supporting the view that the Bank of England will extend its asset purchases once the current round is completed next month.

The PMIs painted a now-familiar picture of Asian manufacturing struggling in the face of tepid demand from Europe.

China’s official manufacturing PMI came in at 49.8, showing that factory activity contracted for a second consecutive month last month, although at a slower rate than in August, when the PMI was at 49.2. – Reuters