Brent slips to $118 on euro zone worries
By Jessica Jaganathan
SINGAPORE (Reuters) - Brent crude slipped to $118 on Tuesday, continuing its steep decline from the previous session, as Spain's debt woes reignited demand growth concerns and threatened to derail the global economic outlook.
Investors remained cautious as Spanish government bond yields broke through the 6 percent mark on Monday for the first time since December, stoking fears that the euro zone's fourth largest economy may need an international bailout.
Brent crude for June delivery fell 43 cents to $118.25 a barrel by 0622 GMT, after sliding 2.59 percent in the previous session, the biggest one-day percentage loss since December.
U.S. crude for May delivery which expires on Friday, slipped 10 cents to $102.83 a barrel, after trading at a high of $103.23 earlier in the day.
"Euro zone concerns are affecting all risk assets at the moment, with the bearish tone suggesting that Greece was just the side show and Spain's the real game," said Ben Le Brun, market analyst at OptionsXpress.
"Elsewhere the economic data is positive, but if something falls over in Spain and Italy, they're too big to fail and too big to bail and will likely create a domino effect."
Spain will see its borrowing costs leap when it sells short-term debt later on Tuesday, with an auction of 12- and 18-month Treasury bills, to test market nerves.
Further adding to investor worries on the crisis, Rome is set to lower the forecast for 2012 output, which predicts a 0.4 percent contraction for the euro zone's third-biggest economy. Continued...