Spain Extremely Worried by Impact of Deadlocked Italy Vote

Running of the bulls
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Spain said it was extremely worried about the impact of Italy's deadlocked election result, warning on Tuesday the deadlock could affect the entire euro zone.

Foreign Minister Jose Manuel Garcia-Margallo said there was a feeling of "extreme concern" over possible movements in bond spreads as a reaction to the results.

"This is a jump to nowhere that does not bode well either for Italy or for Europe," Garcia-Margallo told journalists on the sidelines of a conference in Madrid.

The Spanish government said it was monitoring the situation, especially the fallout on financial markets as the premium investors demand to hold Spanish 10-year debt rather than the German benchmark jumped to 393 basis points, a level not seen in several weeks, when it emerged a cabinet could be hard to form.

Spain's blue-chip index Ibex was down 2.71 percent in afternoon trade.

Economy Minister Luis de Guindos said Spain had a strong liquidity position and could cope with market jitters after the Spanish Treasury sold close to 11 billion euros ($14.5 billion) of debt last week.