European Crisis: Spain Gets €62bn from EU Bailout Funds as Rescue Formalised

1520 BST: It's official

Spain will receive up to €62bn from the temporary EFSF, according to the official Eurogroup statement, until it is transferred into the permanent European Stability Mechanism. Still no word as to whether existing holders of Spanish debt will be subordinated to the ESM when (if?) the rescue funds are transferred.

The International Monetary Fund, the Eurogroup says, will provide "technical assistance" to Spain as part of the adjustment process.

Cyprus, the soon-to-be President of the EU Council, is now officially the fifth Eurozone member to receive rescue funds. The Eurogroup says the aid package, which wasn't quantified, will be tie to fiscal adjustments and structural reforms.

1515 BST: Spain and Cyprus funding now part of EFSF

Reuters is reporting that both Spain and Cyprus have had their bailout requests "accepted" by the European Financial Stability Fund after a teleconference with the Eurozone's Finance Ministers. The Eurogroup, as it's called, has said it will make a formal statement shortly.

1455 BST: Asset Price update

Spanish 10-year bonds are nearing 7 percent once again (6.945 percent) and Italy's have risen to 6.24 percent. The single currency is little changed at 1.2473 while the FTSE Eurofirst 300 is about 0.7 percent better at 993.31.

1450 BST: Back at the tiller

We've been a bit distracted with some features and breaking news this afternoon and have been a wee bit neglectful with the blog - but hopefully you'll appreciate the efforts. I've written short piece on the recent spate of bizarre events in Greece while my collague Lianna Brinded has filed pieces on the capital raising by Italy's MPS and the $290m fined levied at Barclays for alleged Libor market manipulation.

1145 BST: Merkel speaks (again)

Germany's Chancellor Angela Merkel continues her staunch resistance to the idea of joint European debt liability, calling the concept "Economically wrong and counterproductive" in a series of statements hitting the wires ahead of tomorrow's summit.

She instead says structural reforms are what's needed at the centre of any "growth initiatives" for her European partners. She praised Italy's Mario Monti and Spain's Mariano Rajoy for the important steps towards reform the two have taken.

Interestingly, she seems to be embracing the notion of Germany's "isolated" position, saying she expects controversial discussions at the summit and that "all eyes" will be focused on Germany as a result of her position.

1005 BST: Italian bill auction

As expected, Italy's €9bn Treasury bill sale came in at 2.957 percent - but that's still 85 basis points higher than the 2.104 percent the Treasury paid in May. The costs are the highest since December.

0955 BST: Sterling strong

Little change in the value of the pound versus the euro this morning despite dismal bank lending figures from the BBA. Mortgage approvals for the month of May fell to 30.238 from 32,103 in April, a 3.4 percent dip, to the lowest level in more than a year. The net mortgage lending figure fell to -£73m, the lowest on record, from £516m in April.

The pound was marked at .7990 against the single currency and $1.5629 against the US dollar after the figures were released.

0910 BST: Bank of Spain warns on economy

Spain's economic conditions have worsened, the Bank of Spain said this morning, and its recession will deepen into the second quarter and beyond. The central banks says it expected the economy will have contracted even more than the 0.3 percent slip measured in the first three months of the year.

0855 BST: Italian yields improve

Benchmark Italian government bond yields have fallen around 7 basis points to 6.12 percent, according to the electronic trading platform Tradeweb while German bund futures are down 40 ticks on the day to 141.30.

Italy will sell around €9bn in six-month Treasury bills later this morning and should price somewhere in the region of 3 percent.

0825 BST: Rajoy warns on funding

Spain's Prime Minister Mariano Rajoy says his nation's funding costs are unsustainable and calls upon European leaders to help calm financial markets with either the European Financial Stability Fund or the soon-to-be ratified European Stability Mechanism.

0820 BST: Built to last?

We're seeing indications that the early European equity rally might not have the strength to last the session: firstly, Italian and Spanish bond yields are pushing higher, suggesting a deeper sense of risk aversion ahead of tomorrow's Leaders' Summit. Itay's benchmark 10-year bond are marked at 6.21 percent while Spain's are trading at 6.88 percent.

Furthermore, ECB overnight lending data showed European banks took more than €3bn in collateralised funds at the discount window, against around €747bn in deposits. The €3bn figure is markedly higher than in previous days and again hints to a pessimisitic tone.

0805 BST: Solid European open

A good start in the opening minutes for Europe's major bourses, with the FTSE 100 and CAC-40 gaining around 0.4 precent in early trading. Stronger gains for the IBEX (0.8 percent) and FTSE MIB (0.7 percent)

On the economic front, Spanish retail sales for the month of May fell -4.9 percent year-on-year but were significantly better than the -8.2 percent consensus.

0750 BST: Good Morning!

Investors turned a positive session for Asia equities into the red as trading drew to a close but financial bookmakers are still calling for solid start for European stock markets - although I'm not convinced the bullishness is there. The MSCI Asia Pacific Index tried to snap a 5-day losing streak and did manage to post modest gains for most of the day before falling into the red by about 0.24 percent (to 113.38) in the final hours.

Stocks had been given a boost by talk of "proactive" policy measures by officials in China to stimulate faster growth in the world's second-largest economy after a report in the China Securities Journal, but that faded with concern that Germany's intransigence with respect to debt mutualisation and common euro bonds ahead of tomorrow's Leaders' Summit in Brussels would prolong the two-year debt crisis.

The economic calendar is light on major events today, although we will have some interesting headlines to navigate, including an Italian parliamentary vote on labour market reform, state inflation figures from Germany, Spanish retail sales for the month of May, Irish first quarter GDP and UK bank lending data for May from the BBA.

Bond markets are active with a 13 tick dip to open trading for the September Bund future (141.57) while the single currency is trading around 1.2487 against the US dollar.