Global markets and euro fall on periphery fears

Global markets, including the FTSE, pulled back sharply yesterday from multi-year highs, as political uncertainty in Spain and Italy spooked investors.

Over the weekend, Spain's opposition Socialist Party called on Prime Minister Mariano Rajoy to resign over a corruption scandal. Meanwhile, former Italian prime minister Silvio Berlusconi, one of the top candidates in this month's general election, is seeing a resurgence in popularity which many fear could threaten the country's reform programme. Yields on peripheral debt rose in response, with Spanish 10-year government bond yields up 16bps to 5.38% on Monday, while equivalent Italian yields were 8bps higher at 4.41%. The FTSE 100 was down 1.58% by the end of trading to 6,246.84, ...