European Factory Output Falls 0.4%, Italian Debt Auction Yields Rise

Barry Randall
13 Mar, 2013
New York City

European markets traded lower after factory output in the currency union fell more than expected 0.4% in January. Italy fell short of its estimated maximum target of bond sale today as yield rose the most since December.

[R]5:00 PM Frankfurt – European markets traded lower after factory output in the currency union fell more than expected 0.4% in January. Italy fell short of its estimated maximum target of bond sale today as yield rose the most since December.[/R]

European markets traded lower after the release of weaker than expected factory output data and Italy struggled to meet its maximum target of debt sale today.

In London trading, FTSE 100 index fell 0.6% or 42.1 to 6,469 and in Frankfurt, the DAX index inched up to 2.1 to 7,968. In Paris, CAC 40 index slid 0.2% or 6.3 to 3,834.

The benchmark index in Milan declined 1.5% after the government bond yield rose the most in the latest auction.

European markets traded lower after euro zone factory output fell sharply in January and Italy paid the highest interest rate on new 3- and 15-year government bonds totaling €5.32 billion.

The Treasury in Rome sold €3.32 billion of a 2015 government note with an average yield of 2.48%, an increase from 2.3% yield at the previous auction on Feb 13.

In addition, the government sold €2 billion of 15-year bond maturing in 2028 at an average yield of 4.9% compared to 4.805% when the bonds were placed on Jan 15.

The bid-to-offer ratio was 1.28 times compared to 1.37 in the previous auction last month.

In addition, the government also placed €1.67 billion of 2017 to yield 2.95% and 2018 floating bonds to yield 3.03%.

After the three separate bond auctions, the government placed €6.99 billion of debt, less than the maximum target of €7.25 billion.

The euro fell against the dollar after January factory orders declined 0.4%, more than expected.