Spanish fears damage shares: Afternoon market insights

The Australian share market fell sharply to start the week after offshore markets dropped on Friday, with fears of a Spanish bailout spooking investors.

At 2.20pm, the S&P/ASX 200 was down 1.36% to 4130.7 and the All Ordinaries was down 1.6% to 4162.1.

The Australian dollar fell from its six-week high on Friday and was buying $US1.03135 at 2.30pm

On Friday, the Spanish stock market plunged 5.8% and sovereign interest rates rose to dangerous levels, despite the eurozone’s approval for a credit line of up to 100 billion euros to save the banks.

Spain is in a precarious position, with its rising financing costs complicating efforts to pay off its debts, Rabobank analyst Richard McGuire told Business Day today. The Spanish government is now at the risk of needing its own bailout.