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Dublin: 16 °C Friday 31 October, 2014

Euro rallies after Spain offloads new bonds

Is the Eurozone debt crisis dying? Spain’s bond yields might be up, but the Euro is picking up speed afterward.

Portuguese Prime Minister Jose Socrates, left, and Spanish Prime Minister Jose Luis Rodriguez Zapatero have had other things on their mind as they attended the World Cup presentation event in Zurich.
Portuguese Prime Minister Jose Socrates, left, and Spanish Prime Minister Jose Luis Rodriguez Zapatero have had other things on their mind as they attended the World Cup presentation event in Zurich.
Image: Steffen Schmidt/AP

SPAIN HAS SUCCESSFULLY issued a fresh round of new government bonds this morning – a move which has seen the Euro pick up speed in its recovery against the dollar.

Europe’s fourth-largest economy successfully issued €2.5bn in new bonds, the first issue undertaken since the Irish bailout was announced, with demand for the issue doubling the amount on offer.

The average yield on the bonds – which mature in October 2013 – was 3.717%. That rate was massively up on the 2.527% rate commanded for the last similar sale two months ago, but significantly down on the same price being offered on second-hand markets.

There, Spanish bonds had opened at 3.970%. 10-year bonds are also now down, as are those of Italy, while Portugal’s have remained broadly flat.

The auction has driven the Euro back up from its two-month lows of earlier in the week, gaining 0.44 of a cent against the US dollar, up to $1.3182.

European stock markets are also up across the board by about 0.5%, ahead of the ECB’s expected announcements on new measures to tackle the debt crisis at 12:45pm.

Those measures could include the resumption of purchases of Eurozone bonds by the ECB centrally, which would be intended to drive the market price to more sustainable levels.

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