Italian Yields Drop in

Arthi Gupta
28 Dec, 2011
New York City

European markets edged higher after Italy successfully auctioned

[R]1:00 PM Frankfurt – European markets edged higher after Italy successfully auctioned €9 billion of six-month bills at a sharply short term lower yield today. Greece postponed general elections to April. Spanish mortgage lending decreased in October but Swedish retail sales increased in November.[/R]

The European indexes gained after the Italian Treasury sold €9 billion, or $11.8 billion of 179-day bills at 3.251% versus 6.504% at a previous auction on November 25. Demand was 1.7 times the amount on offer compared with 1.47 times previously.

The Treasury also sold €1.733 billion of zero coupon bonds due in 2013 at a rate of 4.853% compared to 7.814% a month ago.

The short term yields plunged after the European Central Bank offered nearly half a trillion euros of loans to 523 banks at 1%. For the second day most of the banks parked this added liquidity with the central bank and did not increase lending to other banks or customers.

The ECB reported banks in the euro zone parked €452.03 billion for overnight deposits, the record beating the previous high for one day deposits of €411.8 billion on Tuesday.

However, long term bonds did not decline as much ahead of long bond auction on Thursday. Italian 10-year bonds fell 20 basis points to 6.7%, but were close to the 7% level that most economists consider unsustainable.

A general election in Greece to replace the technocratic administration of Prime Minister Lucas Papademos has been delayed to April, although the precise date remains unclear.

Greek finance minister Evangelos Venizelos told his party colleagues that elections would be later than February 19 originally agreed.

""Elections will be held after Easter, in late April,"" Venizelos said, according to Agence France Presse.

In Paris trading, the CAC-40 Index gained 18.57 or 0.6% to 3,121.68 and in Frankfurt the DAX Index edged higher 2.86 or 0.04% to 5,893.23.

Swiss Leading Index Drops

An indicator of the health of the Swiss economy continued to decline in December, a survey by the KOF Swiss Economic Institute showed on Wednesday.

The KOF economic barometer declined to 0.01 in December from 0.34 in November, revised down from 0.35.

Spanish Mortgages Fall

Spain''s mortgage lending on residential properties decreased in October, data released by statistics office Ine showed.

The number of mortgages on residential properties decreased 43.6% from a year ago to 22,193 in October. The value of total loans mortgaged on residential properties slumped 46.5% annually.

On a monthly basis, mortgages on residential properties fell 28% in October, the agency said.

Swedish Retail Sales Accelerate

Sweden''s retail sales increased a seasonally adjusted 0.8% on a monthly basis in November compared to the 0.4% rise in October, data released by Statistics Sweden showed.

From a year ago, retail sales rose 0.7% in November.

Separately, loans to Swedish households increased at a slower pace in November, data released by Statistics Sweden showed.

Lending to households from monetary financial institutions increased 5.3% on an annual basis in November, following the 5.5% growth in October.

Gainers & Losers

Areva SA gained 0.1% to €18.96 after the French nuclear group said it is in exclusive talks to sell its 26% stake in mining company Eramet to France''s sovereign wealth fund FSI.

Carrefour SA climbed 0.4% to €17.15 after the retailer announced the disposal of a real estate portfolio of 97 supermarket properties in France for €365 million.

Deutsche Telekom AG rose 0.8% to €8.88 after the telecommunications provider plans to expand its TV offerings and is weighing whether to bid for rights to broadcast German soccer league matches via satellite, Financial Times Deutschland reported, citing Niek van Damme, a company executive.