Markets lose 88 billion euros after Draghi's wet blanket

 Investors looking for a new breakthrough in the eurozone sovereign-debt crisis took out their disappointment on the markets Thursday after European Central Bank President Mario Draghi poured cold water on investors' expectations.

Following the ECB's hotly awaited monthly meeting on Thursday, Draghi said that the soon-to-be-launched European Stability Mechanism, in its current form, will not be able to access ECB funds. He also said the ECB will draft plans in the coming weeks on mechanisms to support eurozone countries facing soaring borrowing costs by buying their state bonds. Gloom and nervousness spread throughout the eurozone, with the Europe-wide Stoxx 600 index losing 1.25% - the equivalent of 88 billion euros up in smoke in a single trading session.

Milan and Madrid felt the brunt of the beating.

Milan's FTSE Mib stock index had been up 2.8% in the morning, but after Draghi's comments it plunged, closing down 4.64% at 13,282 points. Trading volume was unusually high in Milan and saw a cascade of suspensions, both upward and downward, with a total of 2.46 billion euros exchanging hands.

Banks were punished. Mediobanca and Intesa SanPaolo stock prices sank more than 9%, Unicredit slipped over 7%.

Madrid's Ibex 35 sank 5.16% to close at 6,373.40 points. No European stock market was spared. Paris's CAC 40 index lost 2.68%. Frankfurt's DAX index slipped 2.2%. London's FTSE 100 index fell 0.88%.

The spread between Italian 10-year bonds and the German benchmark bund climbed more than 50 points during the day, breaking the 500-basis-point threshold, to close at 505 points with a yield of 6.31%. The spread between Italian bonds and the German benchmark had opened at 451.4 basis points, with Italian 10-year bonds yielding 5.88%.

The difference between Spanish and German bonds also rose, to 585 points, with Spanish 10-year bonds yielding 7.084%.

The spread on the secondary bond market is a barometer of borrowing costs and an indicator of investor confidence in the country's ability to weather the eurozone crisis.

Fortunately for the Spanish Treasury, a bond emission taking place early in the day was spared the market's panic. Demand was stronger than in the recent past, with 10-year bonds yielding 6.647% on average.

Speaking from Madrid after a meeting with Spanish Prime Minister Mariano Rajoy, Italian Premier Mario Monti tried to defend the results of the ECB meeting, saying he saw in them "only steps forward, and no steps backward", and declared Italy and Spain had agreed to do "whatever it takes" to save the financial stability and integrity of the eurozone - words that echoed those of Draghi that temporarily pumped confidence into markets last week.