Markets react to second Greek bailout

EUROPE’s main markets reacted negatively yesterday to growing concern that a second bailout for Greece may not succeed in stemming the flow of the eurozone’s debt crisis.

Yesterday saw continuing uncertainty over the effectiveness of an expanded Greek rescue package and rising concern over the capital solidity of Italy’s main banks.

International rating agency, Moody’s said that it is considering downgrading 13 Italian banks due to them potentially being vulnerable if the country’s credit rating was cut. The announcement comes ahead of a major round of stress tests on Italy’s banks, to be conducted next month. Italian and Spanish bond yields rose yesterday on concern that the debt crisis could spread.