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Jeff Mortimer, director of investment strategy for Bank of New York Mellon's wealth management division, expects Europe's problems to drag on for a long while. "There is no quick answer to the issues that they're wrestling with," he said. "They have a sovereign debt issue, they have a banking issue and they have a growth issue. ... I think we'll have one eye over there for years." Spain was the epicenter of the latest European earthquake. Protestors took to the streets to voice their disapproval of government spending cuts. The Treasury minister predicted that the recession would drag on into next year. And the region of Valencia said it needed help from the central government to pay its bills. Spain did get approval from the other euro countries for a bailout for its struggling banks, but that wasn't enough to calm investors. The Spanish government's borrowing costs shot above 7 percent, the rate at which other countries have been unable to afford to borrow money. Spain's borrowing costs rose to 7.22 percent and its benchmark stock index plunged 6 percent, to 6,246.30. To be sure, bad financial news out of Spain is hardly new. Just as troubling, if not more so, were budding signs that the crisis is deepening even among Europe's relatively strong members. Germany announced that its economic growth likely slowed in the second quarter. In the U.K., the government said it had to borrow more than expected in June. Among other stocks making big moves, Chipotle plunged 22 percent even though the burrito chain reported big jumps in revenue and profits. Even though revenue climbed 21 percent, analysts had expected more. Chipotle stock lost $86.88 to $316.98.
The country's six megabanks -- Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo
-- all fell. Investors are concerned about an array of recent challenges, including Moody's downgrades at all the banks except Wells, and net job cuts over the year at all the banks except JPMorgan.
[Associated
Press;
Copyright 2012 The Associated
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