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U.S. stock index futures added to sharp losses Monday amid worries that Spain will need a full sovereign bailout and mounting fears that Greece may leave the euro.
A number of regional governments in Spain are set to ask Madrid for financial support. Spanish bonds yields surged to their highest levels since the euro was created.
More bad news came from figures showing Spain's economy contracted 0.4 percent in the second quarter, heightening fears that the country will require a full-scale bailout rather than the “bailout-lite” which has been put forward.
Euro zone finance ministers approved terms for a loan of up to 100 billion euros for Madrid to recapitalize its banks last week.
Concerns over Greece also returned amid worries that the IMF may no longer provide financial aid to the debt-ridden nation, according to a report in Germany's Der Spiegel, sparking fears the country could run out of money as early as September. And Greece's Prime Minister Antonis Samaras warned that the country was facing a new “Great Depression.”
European shares plunged and the euro hit a new two-year low against the dollar.
Financials, one of the most sensitive sectors to Europe, slumped heavily. Shares of GoldmanSachs, JPMorgan, Citigroup and Morgan Stanley were all trading lower.
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