Hungary was forced to cancel a bond swap auction amid an escalating financial and political crisis that investors fear could trigger another dangerous shockwave in Europe.Read the rest here.
The Budapest government saw borrowing costs soar and the currency plunge as traders bet that international authorities may abandon Hungary, letting it become the first European Union country to default on its debts.
The florint fell more than 1pc to a record low against the euro and bond yields soared over 10pc. The Hungarian government, which has defied Brussels by introducing a raft of radical constitutional reforms, called off its plans to swap old debt for new because it would be too expensive.
Traders, already rattled by the advancing eurozone debt crisis, including a drastically discounted rights issue by UniCredit, were unnerved by the emergence of a new front in central Europe. France's CAC index fell 1.6pc, while Germany's Dax and the FTSE 100 dropped 0.6pc each.
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