World equity markets sold off and the euro set new two-year lows against the dollar yesterday after reports that more indebted regions in Spain need financial aid fuelled fears that the country may need a bailout.

US stocks surged yesterday, the last day of a weak quarter, as European leaders agreed directly to shore up troubled European banks, offering some relief to investors worried about a eurozone meltdown.

Stocks on world markets edged higher on low volumes yesterday, while Spanish bond yields rose to a euro-era high, as scepticism about a €100bn bailout for Spain’s banks scared investors ahead of elections in Greece on Sunday.