European markets rebound after heavy losses

European markets edged up on Wednesday after making recovering slightly from losses on Tuesday, reports the BBC.

By lunchtime, the French and German indexes were up nearly 1.5 per cent, while the FTSE 100 in London was up by 0.6 per cent. Investors are still concerned about Spain, which is faced with borrowing costs of almost six per cent, despite a slight drop on Wednesday.

In addition, there has been further evidence of Spain’s hard economic times as industrial output fell by 5.1 per cent in February in comparison with the same month in 2011. Madrid has introduced a series of austerity measures recently so as to hit deficit targets that it agreed with the EU. In doing so, economic growth in the Mediterranean country will be restricted.

Ahead of his parliament appearance in which he is likely to provide further budget cut measures, Prime Minister Mariano Rajoy described his country’s situation as “difficult and complicated”. He said that the government’s economic policies are costly and tough and will be unable to produce short-term results, but added that they are what must be done at this time.

Investors are worried that with a contracting economy and increasing borrowing costs, Spain could need a bailout – in spite of the austerity measures, bond yields in Spain have gone up sharply this year.