Spanish, Italian yields rise after auctions

LONDON: Spanish government bond yields rose on Thursday, in the wake of auctions which although posting reasonable results fell short of market expectations and failed to alleviate concerns over the country's long-term fiscal sustainability.

The yield on 10-year Spanish government bonds was last up 4 basis points at 5.89 percent.

"The bid-to-cover looked good but the bids were below what the market had expected so this is why we're selling off right now," one trader said. "The pricing is the reason."

Italian bond yields were also pulled higher, underperforming Spanish bonds as markets looked ahead to supply from Rome next week. Italian 10-year yields were 6 basis points higher at 5.55 percent.

"The market had clearly set itself up for a positive outcome and, hence, the hurdle for an unexpectedly favourable set of results had risen," said Rabobank rate strategist Richard McGuire.