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EU leaders are meeting Thursday and Friday in Brussels for another summit aimed at reining in Europe's debt crisis. Debt-wracked Greece is looking to renegotiate some of the budget-cutting measures it has agreed to in exchange for continued support from international lenders. The summit comes just a week after Greece's new coalition government was formed following months of political turmoil and two inconclusive elections. Two international audits last week found that Spain could need as much as $77 billion. The government wants the loans to go directly to the banks so that it won't be responsible for repayment in case of a default. That idea has met with resistance. The size and interest rates of the loans likely will be discussed at the EU summit this week. Investors are concerned that beyond a rescue for its troubled banking sector, Spain itself may ultimately need a full country bailout like Greece, Ireland and Portugal. Steep losses stung stock markets on both sides of the Atlantic Monday. The Dow Jones industrial average dropped 138 points to close at 12,502.66, a loss of 1.1 percent. The broader Standard & Poor's 500 index fell even more, 1.6 percent. In Europe, Britain's FTSE 100 stock index fell 1.1 percent, France's CAC-40 slumped 2.2 percent, while Germany's DAX dropped 2.1 percent. The selling spilled over to Asian on Tuesday, with Nikkei 225 index fell 0.8 percent and South Korea's Kospi was 0.2 percent lower in early trading. Many analysts believe big banks, including those in the U.S., would be the first to feel the hit of a freeze-up in Europe's financial system if Spain isn't able to convince bond markets that it can rescue its hobbled banks. The uncertainty pushed borrowing costs higher for Spain's government on Monday. Its stock market plunged 3.7 percent. The other 23 banks downgraded by Moody's are Caja Laboral, Banca March SA, Caja Rural de Navarra SCC, Caixa Bank, Instituto de Credito Oficial, Banco Cooperativo Espanol SA, Banco Sabadell SA, Kutxabank SA, Unicaja Banco SA, Banco Pastor SA, Confederacion Espanola de Cajas de Ahorro, Caja Rural de Granada SCC, Bankoa SA, Liberbank SA, Ibercaja Banco SA, Cajamar Caja Rural SCC, Ahorro Corporacion Financiera SV SA, Banco CEISS, Catalunya Banc SA, NCG Banco SA , Banco CAM, Dexia Sabadell SA and Banco de Valencia SA.
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