Oil up in Asia but eurozone fears cap gains

AFP, 25 July 2012

Oil rebounded from earlier losses in Asia Tuesday as investors picked up bargains but the underlying mood remained weak on concerns over the eurozone’s long-running debt crisis, analysts said.
New York’s main contract, light sweet crude for September delivery, gained 73 cents to $88.87 a barrel in afternoon trade and Brent North Sea crude for delivery in September was $1.10 higher at $104.36.
Investors are still worried over the eurozone’s ability to handle its debt crisis.
The Bank of Spain said the nation’s economy contracted 0.4 per cent in the second quarter, following a 0.3 per cent shrinkage in the first three months, citing the impact of the debt crisis on consumer spending and confidence.
Financial markets have turned against Madrid in recent weeks after an initially positive reaction to a massive 65-billion-euro ($53 billion) austerity package turned sour. Each new initiative has failed to hold the line.
The yield — the rate of return investors earn — on the benchmark Spanish 10-year government bond jumped to 7.498 per cent on Monday from 7.225 per cent on Friday.
The rate is well above the 7.0 per cent danger level for long-term funding and similar to those seen in Greece, Portugal and Ireland before they had to ask for a bailout.
‘Spain’s debt woes… had investors running.