European stocks are expected to open sharply lower on Monday amid concerns over the ability of Spain’s regions to pay their debts. On Friday, Spanish stocks fell by nearly 6 percent on news that Valencia had requested aid from the Spanish government to help it meet debt repayments.
As Asia opened on Monday, stocks in Hong Kong fell sharply on news that up to six Spanish regional governments would request aid. Catalonia, Castilla-La Mancha, Baleares, Murcia, Canary Islands and possibly Andalusia are struggling to deal with their debt redemptions according to the Reuters news agency.
In an attempt to ease fears over the Spanish economy, German finance minister Wolfgang Schaeuble told Bild-Zeitung that he is confident the Spanish economy would bounce back from painful adjustments.
In the same interview, Schaeuble warned the new government in Greece that it must redouble its efforts to comply with bailout conditions. “If there are delays, Greece must make up for them” warned the German finance minister as Troika officials prepared to arrive in Athens to check up on Greece’s finances.
In a sign of how tense the situation is, the IMF was forced to deny reports claiming it would not take part in any further bailouts for Greece. The scale of the problems facing Greece were made clear by Prime Minister Antonis Samaras, who told former US president Bill Clinton, who is visiting Greece, that his country is facing a “Great Depression” like that which the U.S. faced in the 1930s.
"You had the Great Depression in the United States," Samaras told Clinton "This is exactly what we're going through in Greece - it's our version of the Great Depression."
Away from Europe, Fed President John Williams told the Financial Times that there is little chance of lowering U.S. unemployment without further policy easing by the U.S. central bank. Williams, who runs the San Francisco Fed, did not go as far as to call for further action given concerns over the impact that could have on the real economy. "I think the argument against further action is the question of uncertainty around the effects, the costs and the benefits of doing so."
Meanwhile, U.S. and European regulators are reported to be close to arresting individual traders and charging with them with colluding to manipulate global interest rate benchmarks. Reuters reports that Federal prosecutors have notified some traders that criminal charges and arrest warrants are imminent.
Before the bell, Philips kicks off the European earnings season. CEO Frans van Houten will join CNBC’s Squawk Box Europe for a CNBC First Interview at 7:15 CET.