European Union Hands $123 Billion Over to Spanish Banks

According to Bloomberg, European governments are aiming to hand over as much as $123 billion in emergency loans in order to stabilize Spanish banks.

In addition, the costs may be moved from the Spanish government's balance sheet in order to shield the country from the debt crisis.

Spain's equities and bonds saw gains after the announcement that 30 billion euros would be made available by the end of July.

The plans led Luxembourg Prime Minister Jean-Claude Juncker to say that the initial cash will "be mobilized as a contingency in case of urgent needs in the Spanish banking sector."

Juncker added that the program, "will succeed in addressing the remaining weakness in the Spanish banking sector.”

Dutch finance minister Jan Kees de Jager is confident that the agreement will be finalized soon.

"We have a tentative deal on the bailout conditions for a bailout of Spanish banks," De Jager said. "The total will likely be €100 billion. Some countries like the Netherlands, Germany and Finland need to get parliamentary approval. We hope this can be wrapped up within a week."

However, the move to stabilize Spanish banks has done little to increase confidence, with both Spanish and Italian bonds suffering a four-day slump and the ECB not appearing to restart its bond-buying program.

According to Reuters, experts will be looking closely at Germany this week, as the country's top court decides if the bailout and new budget rules are compatible with national law.

"A considerable postponement of the ESM (bailout fund) which was foreseen for July this year could cause considerable further uncertainty on markets beyond Germany and a considerable loss of trust in the euro zone's ability to make necessary decisions in an appropriate timeframe," German Finance Minister Wolfgang Schaeuble said in court.

Meanwhile, the limited progress did see world share move up a little on Tuesday, according to Reuters, but a sharp slowdown in China saw oil and industrial commodities prices drop.

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