Spanish stocks, bonds bounce back, investors shrug off Trump trade threat
LONDON, March 4 (Reuters) - Spanish stocks and bonds recovered early losses on Wednesday that were driven by President Donald Trump 's threat to impose a trade embargo on the country after Madrid's refusal to allow the U.S. military use its bases for missions linked to strikes on Iran.
Madrid's blue-chip IBEX .IBEX shook off early weakness to rise 1.4% on the day, making it one of the better-performing European markets. The broader STOXX 600 .STOXX was up 1.1%.
Spanish government borrowing costs dipped in line with the rest of the euro zone bond market, bringing the premium investors want to hold Spanish debt rather than benchmark German bonds back to around 43.7 basis points, from a 2026 high of nearly 47 bps earlier on.
Spanish 10-year bond yields ES10YT=RR fell nearly 4 bps to 3.2%, while those on benchmark German 10-year debt were down 1 bp to 2.765%.
"This is a playbook that Donald Trump has used against many countries before, including Spain. My initial reaction was that the EU is treated as a single trading block and so it's going to be tricky for the U.S. There are some things that are very obviously Spanish (that could be targeted)," James Rossiter, head of global macro strategy, TD Securities London, said.
Shares in large lenders Banco Santander SAN.MC and BBVA BBVA.MC rose 2%, while smaller rivals Caixabank CABK.MC and Bankinter BMK.MC were up 0.3-0.5%.
The U.S. had a trade surplus with Spain for the fourth year in a row in 2025, at $4.8 billion, according to U.S. Census Bureau data, with U.S. exports of $26.1 billion and imports of $21.3 billion. U.S. exports of crude oil and liquefied natural gas to Spain have grown in recent years.
