While all eyes are on Greece, and whether its new coalition government will embrace or discard austerity measures attached to loans, Spain's predicament as the fourth largest euro zone economy is more important, Craigs Investment Partners broker Peter McIntyre said.
He noted Spain's unemployment rate was near 25%, its sovereign bonds had recently been rated down just above "junk" value and this week there were runs on some banks as the population scrambled to grab cash and stock cupboards.
"Greece is teetering and if voters decide not to elect a pro-bailout government, then it will almost certainly leave the euro," Mr McIntyre said.
Mr McIntyre said the probability of the euro area remaining intact was about 80%.
Forsyth Barr broker Peter Young said when Spanish borrowing costs surged, after rating agency Moody's downgraded its credit rating three notches from A3 to Baa3, European stocks declined, with Nokia plunging 18% and Credit Suisse slumping 10%.
On indications the pro-bailout and austerity New Democracy political party in Greece might win, stocks in the National Bank of Greece soared 26%.
Central banks from major economies are ready to take steps to stabilise financial markets by providing liquidity and preventing a credit squeeze if the outcome of Greek elections tomorrow causes tumultuous trading, G-20 officials told Reuters.
A senior US official said that the Greek election would not provide "the definitive signal on what happens next" in the euro zone debt crisis.
But if severe market strains emerge after an unusual confluence of three elections this weekend - there are important polls in Egypt and France as well - central bankers are on stand-by to ensure enough cash is flowing through the financial system.
"The central banks are preparing for co-ordinated action to provide liquidity," said a senior G-20 aide familiar with discussions among international financial diplomats.
His statement was confirmed by several other G-20 officials.
