Spanish borrowing costs rose above 6pc again as a continued stand-off between Madrid and Brussels fuelled fears that the European Central Bank’s bond buying programme pledge is not enough to stabilise the eurozone.
by Louise Armitstead, Chief Business Correspondent
The yield on Spain’s benchmark 10-year bonds were pulled back just below 6pc at the close, but their steady rise all day reflected bets by traders that Madrid’s determination to resist a bail-out will cause more volatility. Some argued that optimism that followed the unveiling of the so-called “Draghi Plan” to buy bonds was already wearing off.
John Wraith, a fixed-income strategist at Bank of America Merrill Lynch told reporters: “It’s more a case of we are relieved about the bullet we dodged but we don’t necessarily find ourselves in a more stable footing. If you look at the actual sustainability of funding deficits at the sort of levels we are still at, it’s still very difficult to see how these weaker countries can survive long term.”