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MADRID/TOKYO Tue Jun 5, 2012 7:02pm EDT MADRID/TOKYO (Reuters) - Spain said on Tuesday it was losing accessto credit markets and Europe should help revive its banks, asfinance chiefs of the Group of Seven major economies conferred onthe currency bloc's worsening debt crisis but took no joint action. Treasury Minister Cristobal Montoro sent out a dramatic distresssignal about the impact of his country's banking crisis ongovernment borrowing, saying that at current rates, financialmarkets were effectively off limits to Spain. "The risk premium says Spain doesn't have the market door open,"Montoro said on Onda Cero radio. "The risk premium says that as astate we have a problem in accessing markets, when we need torefinance our debt. Spain is beset by bank debts triggered by the bursting of a realestate bubble, aggravated by overspending by its autonomousregions. The premium investors demand to hold its 10-year debt overthe German equivalent hit a euro era high last week on concerns itwill eventually have to take a Greek-style bailout. Montoro said Spanish banks should be recapitalized through Europeanmechanisms, departing from the previous government line that Spaincould raise the money on its own. The European Union's top economic official, Olli Rehn, said Madridhad not requested EU assistance but other sources said a lot hingeson an independent audit of the capital needs of Spanish banks,which is due to report soon. Sources in Berlin and Brussels denied a report in German newspaperDie Welt that European officials were considering offering Spain aprecautionary credit line via the bloc's rescue fund by mid-June. Two Spanish government sources had said earlier that Madrid neitherneeded or wanted such a line. "Nothing is being prepared, nothing has been asked for," a senioreuro zone source told Reuters. Another euro zone source pointed to the Spanish bank audit as thenext pivotal moment. One option being discussed in some euro zonecapitals was for money to be handed to the Spanish bank rescue fundFROB to avoid the government having the stigma of asking for aid, athird source said. Montoro's comments on Spain's borrowing sent the euro down afterthe 17-nation European currency earlier hit a one-week high againstthe dollar on hopes that a conference call of G7 finance ministersand central bankers might hasten action. The U.S. Treasury, which chaired that meeting, said in a statementthat the G7 discussed "progress towards a financial and fiscalunion in Europe" and agreed to monitor developments closely. Butthe group made no joint statement and took no immediate steps. White House economic adviser Michael Froman said the EU had done alot to address its debt problems but more action was required toreduce market anxieties. "Europe has taken a number of very important steps in the lastmonths to address the crisis," Froman told a panel at the CSISthink-tank. "It's clear now from the markets that they expect more,and more is needed." Japanese Finance Minister Jun Azumi said the G7 finance chiefsagreed to work together to deal with the problems facing Spain andGreece, where elections later this month could push Athens closerto the euro exit door. "I see market anxiety over world economy largely stemming fromEurope's problems," Azumi told reporters in Tokyo. "BIGGER SOLUTION" European leaders, alarmed by the latest turn of events, have begunthinking seriously about the economic union needed to make thesingle currency project secure. But that end-game is months oryears away. "What we have learnt since the weekend is that all the talk about abigger solution, a bigger response from the politicians is gainingsome steam," said Rainer Guntermann, strategist at Commerzbank inFrankfurt. "At the same time it doesn't look like they have a quickfix at hand, not a fundamental game changer at this point in time." One senior European G7 source, speaking just before theteleconference, said it was set to turn into a "Germany-bashingsession", with other partners applying severe pressure on Berlin todo more to stimulate growth and help the euro zone. The source, who requested anonymity due to the confidential natureof the call, confirmed that Germany was pushing Spain to acceptinternational aid, as Greece, Ireland and Portugal have done, tohelp it recapitalize stricken banks. "They don't want to. They are too proud. It's fatal hubris," thesource said of the Spanish government. Berlin and the European Central Bank have so far resisted pressurefrom Madrid to ride to its rescue without forcing Spain into thehumiliation of an internationally supervised bailout. French Foreign Minister Laurent Fabius said Europe must find asolution to the Spanish banking crisis that did not add to Madrid'salready heavy budget deficit. The ECB holds its monthly rate-setting meeting on Wednesday andEuropean Union leaders meet on June 28-29 to discuss a strategy forovercoming the crisis, which began in late 2009 when Greecerevealed it had covered up a huge budget deficit. MOUNTING CONCERN Emilio Botin, chairman of Spain's biggest bank, Banco Santandertold Reuters Spanish banks needed about 40 billion euros inadditional capital. Montoro said the bank recapitalization figures were "perfectlyaccessible" but analysts were perplexed about his comments onSpain's ability to raise debt. Spain will test the market on Thursday by issuing up to 2 billioneuros ($2.5 billion) in medium- and long-term bonds at auction. His comments appeared aimed at pressuring the ECB and EU paymasterGermany to find ways of helping. But the central bank has so farshunned calls to resume purchases of Spanish government bonds, andBerlin has rejected allowing direct aid from the euro zone's rescuefund to recapitalize Spanish banks without setting conditions forthe government. The festering euro zone crisis has sparked mounting concern outsideEurope. On Monday, a G7 source said fears that capital flight fromSpain could escalate into a full-fledged bank run had triggered theemergency conference call. Pressure is building in particular on Germany, the biggestcontributor to euro zone rescue funds, to back away from itsprescription of fiscal austerity for the region's weaker economiesand to work harder on fostering growth. Berlin argues it is already doing its share by encouraging generousdomestic wage settlements, accepting the prospect ofhigher-than-usual German inflation and most recently agreeing thatSpain should have more time to achieve its fiscal targets. Chancellor Angela Merkel opened the door on Monday to the prospectof a euro zone banking union in the medium term, saying she wouldconsider the idea of putting systemically important cross-borderbanks under European supervision. However, Berlin is so far resisting a joint deposit guarantee foreuro zone banks and a bank resolution fund, both of which wouldcreate new liabilities for German taxpayers. A German government strategy paper seen by Reuters showed Berlindoes not expect final decisions on strengthening economic policycoordination until March 2013, with only a roadmap being agreed atthis month's summit. The e-commerce company in China offers quality products such as China Skin Rejuvenation Machine , China Multifunctional Beauty Machine, and more. For more , please visit Laser Tattoo Removal Machine today!
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