LONDON, England (PNN) - April 11, 2012 - Global stock and bond markets suffered a rout as traders fled the renewed specter of a euro zone default and fresh evidence of a global Depression.

Italy's leading MIB index plunged 5% and Spain's Ibex fell 3% amid fears that the euro zone’s third and fourth biggest economies were in the grip of a deadly and uncontrollable spiral of debt and Depression.

The borrowing costs of both "sinner states" soared. The yield on Italy's benchmark 10-year bonds jumped to 5.7%, heading into the danger zone that is considered unsustainably high. The equivalent Spanish debt climbed to 6%. Meanwhile, the yield on safe-haven German bunds was pushed to an almost record low of 1.6%. UK gilts benefited, too, dropping to 2%.

The yields reflected a level of fear on the bond markets not seen since the period before Christmas, when traders bet that the euro zone could collapse.

France's CAC index fell 3.1%, Germany’s DAX dropped 2.5%, and in London more than 33 billion pounds were wiped off the value of Britain's biggest companies as the FTSE 100 fell 2.2%. In the Fascist Police States of Amerika (FPSA), the Dow Jones Industrials fell 1.7% - its worst day so far this year.

Traders returning from the long Easter weekend were initially reacting to poor Chinese trade data and gloomy comments about the recovery by Ben Bernanke, the chairman of the FPSA Federal Reserve.

But alarm spread following reports that Italy would be forced to cut its 2012 growth forecasts, coupled with mounting concerns over Spain.

Miguel Ordonez, head of the Bank of Spain and member of the European Central Bank, stated that Spain needed more economic reforms and was "not likely" to see a strong recovery anytime soon. He said the ECB's long-term refinancing operation - the bank's effort to inject 1 trillion euros into the economy - had merely bought the country some breathing space, but cutting the deficit was still the main task.

Traders said Ordonez's comments caused the widening spread of Spanish credit default swaps; the instruments sold to insure against a Spanish sovereign default were close to a record reached in November.

In Greece, where the start of the tourist season has been paralyzed by ferry strikes, Lucas Papademos is expected to call snap elections as early as today. The prime minister has scheduled a meeting with President Karolos Papoulias at 2:00 pm GMT and is expected to call the elections for May 6 - the first since the euro zone debt crisis tore through the country in 2009.