Italy

ITs

The European Commission is considering offering Spain direct aid from the eurozone rescue fund to recapitalise distressed banks, as the country's government bond yields approach record highs.

The spread between safe haven bond yields and those of peripheral European nations has widened as fears grow over the weakness of the Spanish banking sector.

The eurozone reported zero growth in the first quarter, beating forecasts of a 0.2% contraction and narrowly escaping a technical recession.

Ratings agency Moody's Investors Service has cut the long-term debt and deposit ratings for 26 Italian banks as the crisis in Europe clouds their prospects.

Baillie Gifford's James Anderson has bought into the Italian stock market for the first time in years, claiming Italy is in a better financial position than the UK.

Italy sold €5.95bn worth of bonds today after Standard & Poor's downgrade of Spain reignited fears over the health of European peripheral economies.

EUROPE

The International Monetary Fund (IMF) has warned the world faces a credit crunch similar to that of 2008/09 as the euro crisis forces banks to cut their balance sheets.

The latest addition to Schroders' bond team has been adding Spanish government bonds across several portfolios in the view Spain is too big to fail.