Euro, US Stocks Fall On Spanish, Greek Woes

Protesters in Greece have gone again in rebellion in the aftermath of the suicide of a pensioner depressed over the economic crisis. The retiree said that the state was moving toward fascism., a photo by Pan-African News Wire File Photos on Flickr.

Euro, US stocks fall on Spanish, Greek woes

Sat May 26, 2012 5:10AM GMT

A trader works on the floor of the New York Stock Exchange on May 8, 2012 in New York City

Euro and US stocks have fallen on fears of Spain's worsening finances and a possible Greek exit from the eurozone region.

After notching some gains earlier on Friday, US markets fell later in the day as uncertainty continued to wreak havoc in Europe, Reuters reported.

The Dow Jones Industrial Average closed down 74.92 points, or 0.60 percent, at 12,454.83. The Standard & Poor's 500 Index dropped 2.86 points, or 0.22 percent, to 1,317.82. The Nasdaq Composite Index fell 1.85 points, or 0.07 percent, at 2,837.53.

Meanwhile, the euro dropped a 22-month low against the US dollar after Standard & Poor's downgraded the credit ratings of five Spanish banks on Friday.

The euro once fell below $1.25 but made some gains later in the day to trade down 0.2 percent at $1.2510.

S&P announced that it had lowered its credit ratings for Banco Popular, Bankinter, Banca Civica, and Bankia along with its parent Banco Financiero y de Ahorro (BFA).

"The rating actions follow our review of the wider implications for economic and industry risks in the Spanish banking sector after our two-notch downgrade of the Kingdom of Spain," the ratings agency said in a statement.

On April 26, S&P lowered Spain's sovereign debt rating to BBB-plus and said that it expected the Spanish economy to contract in 2012 and 2013.

Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs.

Many economists believe Spain's economy will enter into a new recession in the first two quarters of 2012.

The worsening eurozone debt crisis has raised Spain's financing costs and raised concerns that the country might have to seek a European Union bailout, like Greece.

Greece has been in political turmoil since the country’s parliamentary elections on May 6 failed to give any of the participating parties an absolute majority. The political crisis has shaken financial markets and pushed experts into questioning the country's ability to stay in the eurozone.