Unemployment rate in Eurozone is at a record high

London - Unemployment in the countries that use the euro remained at a record high last month, official figures showed Tuesday, underlining the debilitating impact of Europe's continuing debt crisis on its economy.

The numbers from the European Union's statistical agency, Eurostat, come ahead of the meeting Thursday of the European Central Bank's governors, a gathering upon which many hopes of a decisive new intervention to stem the crisis have been pinned.

On the unemployment report, European stocks ended their three-day rally, led downward by Spain's benchmark IBEX 35 index, which was off nearly 1.6 percent.

The yield, or interest rate on Spain's 10-year bond, a measure of the government's borrowing costs, edged higher after several days of declines, ticking up to 6.672, up 0.144 percentage point. Italy's 10-year bond edged back above 6 percent.

According to Eurostat the seasonally adjusted unemployment rate for the 17 nations that use the euro was 11.2 percent in June, stable compared with May's revised statistics but significantly higher than the 10 percent recorded a year earlier. For the 27 nations of the European Union, the unemployment rate was also stable, at 10.4 percent.

Eurostat estimates that 25.1 million men and women were unemployed in the European Union in June, of whom 17.8 million are in the eurozone.

With the European economy paying the price for an acute lack of business confidence, hopes are high that the president of the European Central Bank, Mario Draghi, will follow through on his pledge, made in London last week, to do "whatever it takes" to preserve the euro.

Draghi's comments led to a reduction in the borrowing costs of Spain and Italy, which had been hitting the sorts of critical level that analysts say would make their debt unsustainable in the medium term.

But financial markets will be looking closely to see if there is any more detail forthcoming Thursday about moves to lower the interest rates paid by Spain and Italy. One theory is that the eurozone's rescue fund, the European Financial Stability Facility, could intervene alongside the ECB, which has recently stayed out of the bond markets.

Financial analysts like Holger Schmieding, chief economist at Berenberg Bank, and Christian Schulz, senior economist there, think they can see the outlines of the new strategy, although it remains unclear how much action will be forthcoming in the very short term.


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