Spanish yields hit lowest since September 2010

LONDON: Spanish government bond yields hit their lowest level since September 2010 on Friday after a drop in the country's jobless rate fuelled a sharp bond rally.

The number of registered jobless in Spain fell by 2.24 percent in December from a month earlier. It was the biggest drop ever for a month of December, and the second biggest drop for any month in the history of the data.

"There has been heavy buying," one trader said. "Unemployment collapsed, so I think that's the trigger." Ten-year Spanish bond yields were down 7 basis points on the day at 3.91 percent, pushing their premium over German Bunds below 200 basis points for the first time since May 2011.