Spanish bond auction boosts euro

Investors showed renewed confidence in Spain today, as a government bond auction saw excessive demand.

A total of €5.64bn worth of notes were snapped up in the auction, which was targeting €4.5bn. The Madrid-based Treasury sold three month debt on an average yield of 1.735%, a substantial decrease on the 5.11% yield seen at auction on 22 November. Six month notes were sold at 2.435%, down from 5.227% in October. Analysts explained the drop in yield as a result of the European Central Bank moving to implement unlimited three year loans to banks later today. It is expected Spain's large banking sector will benefit from the development. Italian bonds also gained as the ECB prepared to...