ETF Trends
ETF Trends

Chalk it up to another round of worries about the European economy: a bank failure in Spain, while small, has fanned the flames of concern about Europe and the broader economic recovery.

Although analysts feel that the takeover of a small bank in Spain isn’t a signal of a larger problem that could bring the country’s financial system to its knees, it did capture the attention of investors who were already nervous about the European economy, reports The Wall Street Journal.

The seized bank is CajaSur, which had $16.4 billion in loads and just 0.6% of the assets in the Spanish financial system. [Know Which ETFs Have Euro Exposure.]

Both iShares MSCI Spain (NYSEArca: EWP) and CurrencyShares Euro Trust (NYSEArca: FXE) were brought down 3.5% and 1.4%, respectively, on the news. Although no one is running for the hills just yet, it’s another blow for Spain, which has a widening budget deficit and 20% unemployment. If more consolidation in the Spanish banking sector occurs, it could tighten credit in the country and worsen the crisis. [The Euro ETF Slide: How Low Can It Go?]

To follow the crisis in Europe, visit our category.

Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.