Rajoy wins Merkel backing on economy

CNC report from Berlin
Added On February 5, 2013

Spanish Prime Minister Mariano Rajoy is under fire at home over corruption allegations, but he's won praise from German Chancellor Angela Merkel for his handling of Spain's economy.

Speaking after meeting with Rajoy, Merkel says Germany has great respect and great admiration for Madrid's efforts to reform its finances.

Merkel says the Spanish government is working to get unemployment down and get structural reforms working.

The chancellor reiterates Germany will support Rajoy with all the strength the nation has.

Rajoy over the weekend denied allegations that his center-right Popular Party operated a slush fund from which it paid money to senior party leaders, including Rajoy himself.

Spanish bond and stock markets tumbled on Monday, bringing a months-long rally to an abrupt end as investors pulled back.

And the unease over Spain is rippling across the eurozone with benchmark German Bund yields falling as investors seek safe havens.