Oil falls sharply on euro debt fears

Traders work on the floor of the New York Stock Exchange

Sharp fall: oil down as euro fears grow

REUTERS/SCANPIX

Luke Johnson

 23 July 2012 22:47 GMT

Oil prices fell sharply on Monday, down a second straight day, as worries that Spain is headed for a bailout and the euro-zone debt crisis is spreading prompted investors to sell assets perceived as risky, boosting the dollar and US debt.

Brent fell more than 3% and US crude fell 4%, with both posting their biggest one-day percentage losses since 21 June, after Spain's central bank said that country's economy sank deeper into recession in the second quarter, Reuters reported.

Friday's announcement by Spain's Valencia region that it would need help from Madrid was followed by weekend reports that Murcia appeared on course to ask for assistance.

"There are fears this could be the beginning of a domino effect, which ultimately leads to Spain having to join Greece, Portugal and Ireland in asking for an official rescue," said Carsten Fritsch, an energy…

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