Spain says recession will drag on into 2013

Spain says its recession will drag on into 2013, although the economy will not be quite as weak as it is now.

Treasury Minister Cristobal Montoro said Friday that GDP will contract 0.5 percent in 2013. The previous forecast had been for the economy to grow by 0.2 percent.

This year the economy will shrink 1.5 percent, a slight improvement from the 1.7 percent drop predicted until now, he said.

Montoro spoke at a press conference after regularly scheduled Cabinet meeting. He spoke shortly before the eurozone approved a huge bailout for Spanish banks.

He also said the Valencia region, one of Spain's most heavily indebted, has asked the government for liquidity.

The Ibex stock index fell 3.5 percent on Friday. while the 10-year bond yield rose to 7.11 percent.