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Capital leaves Spain for 14th month in a row

Source: Reuters - Wed 31st Oct 2012
Capital leaves Spain for 14th month in a row

Billions of euros exited Spain for the 14th month in a row in August, reflecting investor unease about the country's troubled economy, though the rate of capital flight slowed further.

Outflows excluding central bank operations eased to 11.8 billion from 15 billion in July, Bank of Spain data showed on Wednesday.

Some 343 billion of capital left the country in the 14 months to August, equivalent to around a third of the total output of the euro zone's fourth-largest economy.

Spain fell deeper into recession in Q3, piling pressure on the government to look for ways to boost growth as it stalls over requesting aid.

Capital outflows were higher in June than in July, but analysts said it was too early to talk about a shift in trend amid volatile market conditions./

Spain's refinancing costs on international debt markets soared to euro-era highs in July but have since eased after the ECB announced a sovereign bond-buying programme for countries that ask for financial help.

But markets remain uncertain about when or whether Spain will apply for rescue funds.

The premium investors demand to hold Spanish ten-year debt over equivalent German paper was slightly down to 414 basis points on Wednesday from around 420 basis points on Tuesday.

Spain's current account was in surplus by 1.24 billion in August, Wednesday's data also showed, up from a surplus of 500 million in July.

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