Spain Business
Spain Business Brief - Tuesday October 14 2008
By h.b.
Oct 14, 2008 - 12:46 PM

Inflation has fallen in Spain by four points to 4.5% thanks to the fall in the cost of food and petrol. Since July the price of a barrel of oil has fallen from 140 to 80 dollars. Falls in the price of milk, bread and chicken have helped with the numbers. Last year at this time inflation was 2.7%.

The pessimism seen on the Spanish Stock Market on Friday gave way to euphoria yesterday as the index soared by 10.65%, its largest daily increase in history, and taking the IBEX 35 back close to the 10,000 level at 9,955. Today the market has continued to rally up 4% after opening and is now over the 10,300 level.
Other European bourses also rallied in response to the deal reached in Paris on Sunday between European leaders which seems to have brought some confidence back to the markets. Spanish Prime Minister, José Luis Rodríguez Zapatero said yesterday that Spain would guarantee bank operations to a maximum of 100 billion € to the end of this year.
In just four days the Spanish Government has approved three royal decrees to protect the Spanish financial sector from the storm.

The Euribor interest rate, used for the setting of mortgages has fallen for the third consecutive day and is now at 5.35% - its lowest rate since the middle of September.
It comes as numbers indicate that housing lost 4.9% of its value in September, with the number of unsold flats increasing to 680,000, according to the Tinsa company.

Banco Santander has reached a deal to purchase the 75% of the United States bank Sovereign which it does not yet own for 1.4 billion €. Santander had taken its shareholding in the bank upto 24% over the past three years, and now becomes the complete owner under a deal made up of the interchange of shares. The press has calculated that Sovereign is worth 1.85 billion €.

Nissan has announced the sacking of 1,680 of the 4,479 workers it has in Cataluña. The company says the cutback will not affect its other factory in Ávila. Unions have attacked the decision saying the company is taking advantage of the crisis in an unjustified way.
They want to cut the number of shifts from three to two and cut production from the 193,000 cars seen last year to 110,000 next year.