January 6, 2012
Doubts over Europe's strategy to overcome its debt woes re-emerged in markets Thursday amid new signs the region is in danger of a recession.
Investors already started the year worried about governments' funding needs this year, with euro-zone governments needing to refinance more than €1 trillion, or about $1.29 trillion, of maturing short-term and long-term debt in 2012.
On Thursday, yields on Italian 10-year bonds crept above the key 7% threshold again, while Europe's bailout fund had to offer higher interest rates than in the past to place €3 billion of debt.
Meanwhile, the euro sank more than 1% to below $1.28, reaching its lowest level since September 2010.
France successfully auctioned close to €8 billion of bonds, at interest rates slightly higher than in previous sales, in what could be its last bond sale as a triple-A-rated credit. Investors are expecting Standard & Poor's to cut the country's rating as soon as this month.
But the euro zone's three largest economies all issued data showing signs of economic deterioration late in 2011. German retail sales posted declines, French consumer confidence ebbed and Italian unemployment registered a further increase.
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