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09.35 Getting paid in Spain is a daily struggle, according to Michel Favre, electrical equipment distrubutor Rexel's chief financial officer. Bloomberg reported him as saying:

We are focused on the cash to have a balanced cash flow in all the countries of the region. We are very keen, mainly in Spain, to be paid. It’s a daily fight, a monthly fight. We are in line with last year, but things must be reworked every day.

09.19 Europe, which has been rocked by a sovereign debt crisis for more than two years, will benefit most from France winning football's European Championship this summer, ABN Amro Bank said. Arjen van Dijkhuizen, an economist at ABN Amro in Amsterdam:

We feel it’s essential that the contagion doesn’t spread to the core countries, [of which France is] closest to the firing line. On the assumption that a victory would provide a confidence boost, it would be best if France won Euro 2012.

09.10 Bank of Spain says country's economy will continue shrinking in second quarter.

"Available indicators for the second quarter are still scarce but they do anticipate that activity will continue contracting in this period," the Bank of Spain said.

08.52 Spanish Secretary of State for Trade, Jaime García-Legaz, says EU help for his country's banks "isn't on the table".

08.35 Justice secretary Ken Clarke has been speaking to the Today programme.

On the possibility of an EU referendum to win an election:

It’s a complete non sequitur. I’ve seen far worse in my time in government... The idea you’d turn to a complete irrelevance... I can’t think of anything sillier to do... I’m not keen on referendums.

On demand for a referendum:

It’s just the frenzied Eurosceptics who believe in the bogies under the bed... the nation is a bit eurosceptic... [the demand comes from ] a few Right-wing journalists and extreme nationalist politicians.

08.24

This refers to Massimo Ponzellini, chairman of Impregilo - the largest construction group in Italy - and former president of Banco Popolare Milano. Bank's shares down 2.1pc.

08.19 Spanish nationalised lender Bankia down 6.1pc today. The shares opened down 27pc yesterday after a trading suspension on Friday.

IBEX turns negative, now down 0.3pc.

08.14 The Adam Smith Institute has stated that today marks Tax Freedom Day - the point in the calendar when Britons stop working for the Treasury and begin to earn for themselves.

But the think tank said it has occured two days later than last year.

08.10 Back to BoE chief economist Spencer Dale. He told BBC Radio Scotland that a second round of QE will take time to have an impact and the UK still needs to see inflation slow further. He expects a gradual economic recovery this year but admits conditions have been tough for companies.

08.08 Telegraph Head of Business Damian Reece has summed up the daily financial news in his regular email:

George Osborne's Treasury is in trouble this morning. The Chancellor seems to be losing what many in business had seen as a reasonably sure political touch in his handling of the economy and public finances since the Coalition was elected two years ago.

First, he is being forced into an embarrassing U-turn on Budget measures - the infamous taxes on pasties and caravans.

Second, he is being openly attacked by Bob Diamond, chief executive of Barclays, over the Treasury's handling of the bank's tax affairs.

The first reveals a lack of attention to detail and failure of forethought when producing the Budget while the second a misjudged political attack on business. Both create an unnecessarily negative view of the UK as a place to do business, giving the impression of a country whose financial affairs are subject to flawed and arbitrary tax laws.

08.03 BREAKING NEWS...

Spanish retail sales fall 11.3pc versus a year ago - a record.

08.00 European markets are open:

FTSE 100 +0.3pc

CAC +0.7pc

DAX +1.2pc

IBEX +0.6pc

MIB +0.6pc

07.58 Asian markets have risen this morning. Tokyo rose 0.74pc, Seoul added 1.41pc, Hong Kong was up 0.78pc and Shanghai rose 1.18pc.

Shares received a lift on hopes that China will implement new stimulus measures to raise domestic demand and fast-track some major construction projects.

07.54 Bank of England's chief economist Spencer Dale:

Monetary policy now is very stimulatory, it will continue to flow through.

07.38 Taiwan's finance minister Christina Liu is offering to resign after a capital gains tax she proposed ran into opposition. Taiwan's premier has not indicated if he will accept the resignation.

07.36 Bloomberg has reported that Spanish banks are masking their full exposure to soured property loans while they continue to prop up insolvent “zombie” developers, leading to credit-rating downgrades and plummeting share prices.

Spain is trying to clean up its banks, requiring lenders to set aside more for possible losses on loans deemed performing to developers like Metrovacesa SA, which hasn’t completed a project in more than a year and has none under way. While that represents about €30bn of increased provisions, it’s not enough because many of the loans said to be performing aren’t, said Mikel Echavarren, chairman of Irea, a Madrid-based finance company specializing in real estate.

“Spain has engaged in a policy of delay and pray,” Echavarren told Bloomberg in an interview. “The problem hasn’t been quantified by anyone because there is huge pressure not to tell the truth.”

The Economy Ministry says that Spanish banks have €184bn of developers' loans and assets that are “problematic”, while the remaining €123bn are performing. The need for more reserves to cover losses on the loans can’t be ruled out, Nomura International analysts Daragh Quinn and Duncan Farr said in a May 14 report. If Spain took losses on developer loans like Ireland did, Spanish banks would need €8.9bn under the best case to €76.5bn of additional provisions in the worst scenario, Nomura estimates.

07.33 The EU has reportedly said that Spanish banks need €100bn support.

07.31 Spain's credit rating has been cut to A by Japan's R&I (note: not one of the three main agencies).

R&I said Spain faces "much more challenging path" to fiscal soundness, and it may not be able to reduce its fiscal deficit as planned.

07.28 Ben Broadbent (see 07.25) says the BoE's forecasts imply inflation will "bobble around" the current level of 3pc for most of 2012. He added that the fall in inflation looks to be taking slightly longer than first thought.

On quantitative easing, he said that there is no reason to suspect second round of QE is less effective than the first

07.26 German import prices fell by a stronger-than-forecast 0.5pc on the month in April, bringing the annual rate to +2.3pc, its lowest since the start of 2010, the Federal Statistical Office has reported.

07.25 The Bank of England's Ben Broadbent has been talking with Bloomberg about inflation and QE. Here is the interview in full:

07.22 Japan has said it will start direct currency trading with China for the first time, scrapping the dollar as an intermediary unit to boost ties between the two Asian economic giants.

The move, which will boost trade and investment between the traditional rivals, marks the first time Beijing has allowed a major currency other than the greenback to trade directly with the yuan.

07.20 European Commission President José Manuel Barroso, Industry Commissioner Antonio Tajani and economist Jeremy Rifkin will today take part in a conference entitled "Mission Growth: Europe at the lead of the new industrial revolution".

Together with key European leaders and CEOs, they will discuss the steps needed to make Europe more innovative, gain ground lost to competitors and "recover the path of robust and sustainable growth".

07.17 While Alistair Osborne writes that whatever Rajoy says, more Spanish banks will need bailing out:

How long can Mariano Rajoy keep this up? You know, the old matador routine. Swooshing his cape and declaring: “There will be no rescue of the Spanish banks.”

You’d hardly expect Spain’s PM to say anything else. But no-one believes him, judging by yesterday’s trampling in the bond markets. The extra return investors demanded for holding Spanish debt over Germany’s shot up to 5.09pc – a euro-era high.

The reasons? For starters, Madrid’s botched bail-out of Bankia, that paella of seven cajas, or savings banks. In just a fortnight, Bankia has gone from requiring €4.5bn (£3.6bn) of emergency funding to €23.5bn. Go figure, as they say.

Then, there’s all Rajoy’s mixed messages, in one breath ruling out a foreign bail-out for Spain’s banks, the next backing a eurozone rescue fund for lenders that bypasses national governments. “Lots of people are in favour of that, and I certainly am,” was his take on that.

_{Bankia asked the Spanish government for a further €19bn last week to strengthen its balance sheet. Spanish taxpayers have already given the bank €4.5bn (Photo: Getty Images)}

07.07 Ambrose Evans-Pritchard, our international business editor, says the Spanish PM's promises have given a "fateful hostage to fortune":

So where will [Rajoy] find the money to finance his €23.5bn bail-out of Bankia, a bank deemed healthy just weeks ago? The Fund for Orderly Bank Restructuring (FROB) has €5.3bn, and other banks to worry about. It would be ruinous to tap the bond markets. Spanish 10-year yields are already at danger levels of 6.4pc. The spread over German Bunds has reached a post-EMU high of 514 basis points.

Capital flight has cut foreign holdings of Spanish debt from 50pc to 37pc since January. Spain's banks -- including Bankia -- have been propping up the state with €316bn borrowed from the European Central Bank. Now the state is propping up banks. The incestuous nexus is surreal.

David Owen from Jefferies said Spain is near the point of no return. "It is not sustainable. They hope things will calm down after the Greek elections. We think there will have to be external intervention," he said.

07.00 Does Spain need a bail-out, or doesn't it? As far as Spanish PM Mariano Rajoy is concerned, the answer is no - even as the country's benchmark index plunged to a nine-year low and borrowing costs rose to 6.5pc. Louise Armitstead reports:

At a press conference designed to reassure markets after the €19bn nationalisation of Bankia, the prime minister admitted that Spain was “finding it very difficult to finance itself”.

But Mr Rajoy blamed the soaring borrowing costs on advancing debt crisis across the eurozone, and tried to dismiss fears that Madrid will be crushed by the debts of its banks.

Shares in Bankia, which were suspended on Friday as the government unveiled its largest ever recapitalisation plan, plunged 27pc before recovering.

The Spanish newspaper, El Mundo fanned the fear by claiming that a further €30bn was required to rescue four other banks, CatalunyaCaixa, Novagalicia, Banco de Valencia.

06.45 Good morning and welcome back to our live coverage of the European debt crisis.

Debt crisis live: archive