SHANGHAI, Jul. 23 (SMM) -- Base metals plunged last weekend as worries heated that Spain may apply for Euro Zone aid. The Euro weakened to record lows against the US dollar, Japanese Yen, and other major currencies, with a noticeable increase in anxiousness seen in the market.

Spanish debt yields surged to record highs in the euro-era last week after its debt-ridden Valencia province applied for government aid. Ten-year Spanish debt yield climbed 25 basis points to 7.24%. In addition, Spanish Budget Minister cut Spanish economic growth forecast for 2013, noting the Spanish economy will remain in recession. Policy makers had expected Spain’s banking industry aid plan would ease its borrowing pressure. As the nation’s debt yields have surged to unsustainable levels, the European debt crisis is likely to worsen. Rating agency Egan-Jones cut its rating for Spanish debt from CCC+ to CC+, a junk status. Spain’s new fiscal austerity measures may fail to stop borrowing cost from climbing further. The European Central Bank said Friday it will not accept Greek bonds as collateral, denying Greek banks access to low interest rate ECB loans if the latter fail to improve their financial status as required. The European debt crisis therefore still sees no near term ending.

Global financial markets also shed heavy losses. The Stoxx 600 Index lost 1.41% to 258.17 points. In Euro Zone nations, French CAC 40 Index dropped 2.14% to 3,193.89 points, the German DAX 30 Index fell 1.90% to 6,630.02. The FTSE 100 index slipped 1.09% to 5,651.77 points. Stock indexes of the United States were also dragged down, with the Dow Jones Industrial Average falling 120.79 points or 0.93% to 12,822.57 points, the NASDAQ Composite shedding 40.60 points or 1.37% 2,925.3 points and the Standard & Poor’s 500 Index falling 13.85 points or 1.01% to 1,362.66 points. Three-month copper on the London Metals Exchange closed down 2.5% at USD 7,545/mt, following its rebound last week.

Investor risk appetite has somewhat cooled after releases of stagnation-pointing economic data from both China and the US. That may indicate base metals are shut from any rebound at the moment. Losses are expected if 2Q economic reports from Europe and the US continue to disappoint.