Investors keep pressure on weak governments’ borrowing
SPAIN saw government borrowing costs edge up and its stocks slip further again yesterday, as uncertainty over the future of the Eurozone and the stability of the country’s banking sector continued to unnerve investors.
Yields on 10-year Spanish bonds rose sharply from 6.266 per cent to 6.322 before dropping back to 6.276 per cent at the end of the day, while stocks on the IBEZ slipped 0.65 per cent.
Italian stocks also slid 0.28 per cent, while markets in stronger countries rose – the FTSE 100 gained 0.7 per cent, the French CAC rose 0.64 per cent and the German DAX 0.94 per cent.
Safe havens Germany and Belgium benefited from the flight away from at-risk countries in debt auctions yesterday.
Germany sold €2.91bn (£2.35bn) in one-year debt at yields of just 0.0264 per cent – a record low – while Belgium sold €2.55bn in five, 10 and 15-year debt, paying 3.453 per cent on its 10-year bonds, down from 3.737 per cent in February.
“Overall these yields are causing a great deal of concern in the markets and are providing a good indication that contagion from the ongoing Greek crisis remains a very real possibility,” said Investec’s Lee McDarby, particularly highlighting the soaring Italian and Spanish costs.