Spain's economy shows glimmers of hope

The days when the fortunes of Italy and Spain marched in lock-step could now be a thing of the past.

Nervous investors have tended to worry about Italy and Spain at the same time since the euro crisis began: a default in either country, they feared, would blow up the euro. But this time Spain seems to have avoided contagion from its neighbour for now, at least.

After last week's Italian election, Spanish ten-year bond yields leapt alongside those of their Italian counterparts, but by early this week they had fallen back from about 5.4% to 5%, as investors recovered their poise and kept buying Spanish debt. So why the confidence in Spain this time?

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