Fire fighting teams in the Spanish Canary Islands are struggling to contain two forest fires which have now forced more than 4000 people from their homes. Spain has been asked to send more military help along with another aircraft to drop water on the fires. The blaze has cut road links and power lines on the islands.

Meanwhile, in Australia, dozens of firefighters are battling a large grass fire which is burning out of control on Queensland's Darling Downs. The blaze is moving quickly through grass and bushland near Leyburn, north-west of Warwick.

Spain's Prime Minister Mariano Rajoy has announced a package of spending cuts and higher taxes that he says will save the country 80 billion dollars by the end of 2014. Unveiling the austerity plan to lawmakers today, the Prime Minister said the country is at a crucial moment and must end its budget crisis as soon as possible. The package includes cuts to civil service wages and unemployment benefits, as well as sales tax increases. In the capital, Madrid, the coal miners have protested the announcement saying big cuts in subsidies to mining companies will destroy their industry.

The ratings agency Moody's has cut the credit rating on 28 of Spain's banks one week after the country asked for money to support them. The move follows a cut to the Spanish government's own credit rating to just above junk status earlier this month. Moody's said in a statement that Spain's reduced creditworthiness implies a weaker credit profile for Spanish banks. Among the downgrades was a cut to Banco Santander. Its long-term rating was cut to Baa2 from A3 and that rating is itself under review for a possible further downgrade. But Moody's kept Santander one notch above the sovereign rating of Baa3, the Moody's release noted, because of the bank's geographic diversity and what it sees as its manageable exposure to Spanish sovereign debt. Banco Bilbao Vizcaya Agentaria was also among those whose ratings were cut.

Earlier yesterday Spain formally asked for money to help support its banks after an independent audit of Spain's banks last week found that they will need up to 62 billion euros in extra funding. European authorities had already agreed to provide up to 100 billion euros ahead of assessments of the banks' needs.

Asian markets shot up on Monday, stocks surged to a four- week high after Spain sought as much as 100 billion euros to save its banking system and Chinese export data topped forecasts.

So Japan's Nikkei 225 index surged 2%; Hong Kong's Hang Seng spurted 2.4%; China's Shanghai Composite index rose 1.1%; South Korea's KOPSI jumped 1.7%; and Singapore's Straits Times index gained 1.8%. Chinese data over the weekend showed strong exports and imports growth, and inflation cooling more rapidly than expected amid an economic slowdown.

In the European markets, key stock indices in the UK, France and Germany were up by between 1% and 1.9% in intra-day trade on Monday.

Spain's Treasury today said the government's plan to shore up the banks with a loan of up to 100 billion euros will reinforce the overall solvency of the debt markets in the country.

Spanish Prime Minister Mariano Rajoy has hailed a decision by eurozone Finance Ministers to help Spain shore up its struggling banks as a victory for the European common currency.

The eurozone ministers agreed on Saturday to lend Madrid up to 100 billion euros to help banks hit by bad property loans. The US and the International Monetary Fund also welcomed the move.

Mr Rajoy told a news conference in Madrid that it was part of efforts by his centre-right government to restore Spain's public finances and carry out structural reforms. He said the rescue would help the process of restoring the credibility of the Spanish economy.

European markets suffered a jittery session today as concern continued over Greece and Spain. Spain's main index is trading higher after losing more than two per cent earlier. Some investors moved money into German bonds, which are seen as low-risk. 

The oil price also fell, reflecting worries about the global economy. Confidence in European banks was undermined by rating agency, Moody's, which cut the credit ratings of 16 Spanish banks late yesterday.