Euro slips as borrowing rates in Italy, Spain rise

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Associated Press

Posted on June 12, 2012 at 12:00 PM

Updated Tuesday, Jun 12 at 12:01 PM

NEW YORK (AP) — The euro is falling against the dollar as borrowing rates in Italy and Spain soared, a sign that investors are worried about the finances of both countries.

Traders are concerned that a $125 billion rescue plan for Spain's financial industry offered by other European countries is only a temporary fix for Europe's debt crisis.

The interest rate on Spain's 10-year benchmark bonds jumped as high as 6.82 percent. Italy's yields rose just over 6 percent.

On Monday, Italy said that its economy contracted in the first quarter, raising fears that it may be the next country to ask for a bailout.

The euro slipped to $1.2477 in afternoon trading from $1.2498 Monday.

The British pound rose to $1.5564 from $1.5498.

The dollar rose to 79.38 Japanese yen from 79.44 yen.

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