Global economy back from financial abyss

1.16 The eurozone's temporary bailout fund has just got a short-term debt auction away at slightly higher rates than a previous auction in February. The European Financial Stability Facility (EFSF) sold €1.9bn of six-month bills at average rates of 0.204pc (versus 0.1908pc). There were 2.7 bidders per bond on offer (versus 3.1). 11.08 Mr Nowotny also said that Portugal was in a better position than Greece in terms of its debt and foreign trade position. Last week, PIMCO chief Mohamed El-Erian told Germany's Der Spiegel that Portugal will need a second bailout as its original €78bn package falls short. 10.57 Ewald Nowotny, the governor of the Austrian Central Bank and ECB board member has said that the North-South eurozone divide will widen in the medium-term. Speaking during a webchat hosted by Austrian daily Der Standard, he said: Quote Such a divergence is unfortunately to be expected in 2012 and also probably for the next two years [...]After that, the effects of the structural measures adopted in the meantime should work and show up in correspondingly higher growth rates in the states. 10.35 IMF chief Christine Lagarde has said that the global economy has moved back "from the abyss" but that there were still weakness in the global financial system. Speaking at a conference in India, she said: Quote We are further away from the abyss than we were three months ago [but there are still areas] that need to be attacked with vigour. Financial institutions were high contagion agents for this crisis - this tells us where reforms have to focus. Financial institutions have to be agents for growth, not a threat to growth. Ms Lagarde also reiterated concerns about the rising oil price. She said that major disruption in Iran could see prices rise by up to 30pc. 10.16 This follows a short term debt auction in Spain, where borrowing costs fell significantly. The Spanish Treasury sold €3.6bn of 12-month debt at average yields of 1.418pc, compared with 1.899pc at the last auction in February, and 18-month bills at average rates of 1.711pc (versus 2.308pc). 10.11 Greece has sold €1.3bn of short term debt at lower rates than a previous auction in February. The country sold 3 month bills at an average rate of 4.25pc, down from 4.61pc at the last auction. There were 2.69 bidders for every bond on offer, compared with 2.7 in February. 10.07 Earlier, Tony Tyler, the head of the International Air Transport Association (IATA) said airlines faced bankruptcy if fuel prices were to soar to $150 a barrel. He said: Quote We cannot rule out the possibility of some bankruptcy, all regions will lose in this case, the most losses will be in Europe, but everywhere, there will be significant effects. 10.06 The oil price fell this morning after Saudi Arabia pledged to take action to lower soaring prices. Prices for April delivery fell $1.42 to $123.55 as the country said it will work "individually" and with the other petrol-rich Gulf states to return prices to "fair" levels. More from our reporters: The country indicated earlier this year that $100 a barrel was the ideal oil price. The price of oil slid this morning in London as a result, with Brent crude trading down as much as 1pc at $124.40. Oil prices have climbed to $127 a barrel this year, just $20 short of their all-time high, as tighter Western sanctions on Iran threaten to choke off the country's exports. Prices also took a hit this morning after China increased retail fuel prices for the second time in two months, increasing concern that demand in the country - the world's second-largest oil consumer after the US - will decline.