2012.06.06 10:04:12 Spanish Default Protection Costs Fall, Italy CDS Steady

LONDON (Dow Jones)--The cost of insuring Spanish government debt against a default dropped Wednesday amid optimism of a coordinated international response to the financial crisis or further stimulus from the Federal Reserve. Spain's five-year CDS--insurance-like contracts designed to pay out if creditors suffer losses--were seven basis points tighter at 593 basis points, according to data-provider Markit. This means it now costs an average of $593,000 a year to insure $10 million of debt issued by the country. Support for the market came from financial chiefs from the Group of Seven leading industrial nations Tuesday pressing European leaders to act more aggressively on the escalating debt crisis, as well as well as a shift at the Federal Reserve that could result in actions to spur the economy. Despite the overall positive tone, credit default swap levels throughout the euro zone remained elevated. Italy's CDS were unchanged at 565 basis points from the closing level Tuesday, while Germany was unchanged at 101 basis points. The iTraxx SovX Western Europe index of 15 European countries was one basis point tighter at 326 basis points. Write to Art Patnaude at art.patnaude@dowjones.com (END) Dow Jones Newswires June 06, 2012 04:04 ET (08:04 GMT)