Eurozone won't allow defecit of a member country

A Senior Spanish official said yesterday that Sunday's agreement on details of a Greek bailout package showed that the euro zone will not allow the default of a member nation.

"It shows the unanimous decision of the European Union, and especially the euro zone, to support financial stability, and it leaves no room for the hypothesis that a euro-zone country could ever default." Diego Lopez Garrido, secretary of state for European affairs, said Monday.

Euro zone finance ministers spelled out the main terms of a EUR30 billion bailout package for Greece on Sunday, after last month's limp show of support failed to change Greece's crippling financing costs.

Lopez Garrido said all euro zone countries benefit from the increased "financial stability" brought by the support for Greece. He noted that the Greek bond yields were lower Monday - an indicator of increased investor confidence - as were those of Spain.

The Spanish official noted, however, that Greece has a treasury bill auction Tuesday, which will be a "key test" of investor sentiment, he said.

Lopez Garrido said Spain's contribution to the support package would be around 12% of the total, or EUR3.68 billion, a contribution proportional to its stake in the European Central Bank.