Buy My IOU – Sell Your Government IOU For CASH

The stress test on banks has failed to calm nerves over Europe’s debt crisis

Stock markets fell on Monday as a healthcheck on banks failed to stem worries about Europe’s debt crisis.

Financial shares were heavy fallers, with Royal Bank of Scotland down 3.8% and BNP Paribas 3.1% lower.

In early trading the FTSE 100 index fell 0.9%, France’s Cac 40 shed 1.4%, and Germany’s Dax was 1.3% down.

On Friday, five European banks failed a stress test on their finances, while another 16 were said to be near the danger zone.

Meanwhile, the price of gold topped $ 1,600 an ounce for the first time as investors put money into the haven commodity.

Concerns among investors have also been fuelled by the Obama administration’s failure to agree a debt-ceiling deal.

The US risks defaulting on its debts unless Congress can agree new rules that will allow Washington to borrow more money.

The euro has fallen and the borrowing costs for Spain and Italy rose

European stock markets fell heavily on Monday, weighed down by fears that the eurozone’s debt crisis was spreading.

In late afternoon trading, Italian shares were down more than 4%, France’s Cac index fell 3%, Germany’s Dax fell 2%, and London was down 2%.

Banks across Europe were hit hard, with Italy’s Unicredit down 10%.

Eurozone finance ministers were holding talks on a new aid plan for Greece, but this was overshadowed by fears of contagion spreading to Italy and Spain.

The euro fell, while borrowing costs for Spain and Italy rose to 12-year euro-era high.

“There are tensions across the eurozone, we must find a solution,” Belgian minister Didier Reynders said to reporters on arrival at the finance ministers’ meeting.