Wednesday, 06 June 2012 00:18
LONDON: A rise in safe-haven German bond prices after Spain said it was becoming shut out of bond markets proved short-lived on Tuesday, suggesting some investors see a growing chance the country will take external help for its banks.
Treasury Minister Cristobal Montoro said the country's high borrowing costs meant "Spain doesn't have the market door open", adding that the European Union should help to recapitalise its fragile banking sector.
That upset jittery investors, increasing demand for the safety of German debt futures, which rallied to a session high of 146.34 before appetite for riskier assets recovered, also helped by solid US economic data.
Bund prices were last flat on the day in thin trade on the second of two bank holidays in Britain.
Worries that the cost of rescuing Spain's banks may be too high for the country's already-stretched public finances sent the risk premium on Spanish debt to a euro-era high last ...