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Updated at 1:30 pm on 18 May 2012
World stocks and oil prices have fallen as economic news out of Europe continues to worsen, with Spain the focus of investor worries.
The euro zone's fourth largest economy has tumbled into recession and concerns intensified about the health of the country's banks.
Figures from Spain's national statistics institute showed the economy contracted by 0.3% in the first quarter of 2012, confirming it was officially in recession.
The country's borrowing costs shot up at a bond auction on Thursday, also affected by reports of an outflow of deposits from state-controlled bank, Bankia.
Shares of the partly nationalized Bankia fell 13.5% but recovered some of the losses after the government denied there had been a large amount of withdrawals.
British Prime Minister David Cameron has renewed his call for euro zone leaders to take decisive action or face the break up of the single currency over the Greek debt crisis.
Britain is not a euro zone member but the bloc is a key trading partner and fallout from the debt crisis is having a serious effect on the entire 27-member European Union.
Fears that Greece will exit the euro zone have been growing since an inconclusive poll in May, in which parties opposed to austerity measures linked to a financial rescue package gained strong support. A caretaker government is in place until new elections on 17 June.
European heads of government have discussed the crisis in a video conference scheduled to talk about the weekend's G8 meeting of industrialised countries.
The conference involved Mr Cameron and other European leaders including German Chancellor Angela Merkel and new French President Francois Hollande.
European shares extended their losing streak because of the crises in Greece and Spain while US stocks hit a four month low.
The pan-European FTSE 300 index dropped 1.2%, a fourth straight day of declines.
London's FTSE 100 index fell 1.3%, Frankfurt's DAX was down 1.2% and Paris' CAC 40 index was 1.2% lower.
The euro fell more than a cent against the US dollar.
In the United States, Wall Street stocks continued to fall as weak economic data worried investors already concerned about the ongoing debt crisis in Europe.
The Dow Jones industrial average dropped 1.2% to 12,442.49 while the Nasdaq Composite Index tumbled 2.1% to 2,813.69.
Brent crude futures extended losses to more than $US2 a barrel on concerns about Greece and the wider euro zone. Brent July crude fell to a low for the year before recovering slightly to $US107.42 a barrel,
Copyright © 2012, Radio New Zealand
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