Yields of Spain and Italy Rebound, UK Mortgage Approvals Rise

Arthi Gupta
25 Sep, 2012
New York City

The European indexes extended losses for the second day. Italy and Spain completed bond auctions today. UK mortgage approvals rose in August. Cairn Energy sold 8% stake in Cairn India for $910 million.

[R]3:00 PM Frankfurt – The European indexes extended losses for the second day. Italy and Spain completed bond auctions today. UK mortgage approvals rose in August. Cairn Energy sold 8% stake in Cairn India for $910 million.[/R]

European markets extended losses for the second day this week and look ahead to the meeting of German Chancellor Angela Merkel and ECB President Mario Draghi.

Yesterday, stocks edged lower after Spain and France struggled to propose budgets that meet the European Union guideline of keeping the deficit below 3% of gross domestic product. And, Germany and France disagreed on the timetable to implement a single supervisory banking authority under the European Central Bank.

Italy raised €3.937 billion in a bond auction at lower borrowing costs and Spain sold €4 billion of bills at an auction today.

In Paris trading, the CAC-40 Index declined 12.61 or 0.4% to 3,484.61 and in Frankfurt the DAX Index edged lower 25.03 or 0.4% to 7,387.67.

The yields on Spain’s benchmark 10-year rose three basis points to 5.73%. Italian 10-year yields rose 7 basis points to 5.11%.

Italian Bond Auction

The Italian Treasury raised €3.937 billion from the sale of its zero coupon bonds maturing in September 2014.

The average yield on the zero-coupon 2014 bonds fell to 2.532% from 3.064% in the previous sale on August 28. The bid-to-cover ratio fell to 1.65 from 1.95.

Spanish Bond Auction

Spain sold €4 billion of bills at an auction today, the Bank of Spain said. The average yield on the three-month treasury bills rose to 1.203% compared to 0.946% at a previous sale on August 28. The bid-to-cover ratio for the three-month paper declined to 1.83 from 2.17.

The average yield on the six-month securities increased to 2.213% compared with 2.026% in the prior auction.

German Sentiment to Remain Stable

Germany''s consumer confidence is set to remain stable in October, survey results from market research group GfK showed today.

The forward-looking consumer sentiment index was at 5.9 in October, unchanged from September.

The economic expectations index rose 1.7 points to -17.2 points in September from -18.9 in August.

UK Mortgage Approvals Rise

UK mortgage approvals rose to an unexpected 4-month high of 30,533 in August, from 28,750 in July, data released by the British Bankers'' Association showed today. The mortgage approvals were 13% lower than August 2011.

Gross mortgage lending in August fell to £6.9 billion compared to £7.1 billion in July.