MADRID: The spread, or difference in interest rates, between 10-year Spanish and German bonds hit a record high in early trading on Wednesday, underscoring fresh fears of contagion in the eurozone debt crisis.
The rate on 10-year Spanish bonds jumped to 6.495 percent, while the benchmark German Bund traded near an all-time low of 1.443 percent.
Italian bonds approached the psychologically key six-percent mark, at 5.946 percent.
Ten-year borrowing costs of greater than six percent are widely considered to be unsustainable in the long term.
Italy and Spain are suffering "contagion" effects from the Greek debt crisis because investors wonder if the two much bigger eurozone economies will also end up in dire financial straits, and have to default on their debts.
The market's reaction is to "seek shelter in safe assets, which is to say German debt," economists at BNP Paribas explained in a research note.
"This trend is likely to endure," the analysts forecast.
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