Europe close: Markets down after expensive bond auctions

Date: Tuesday 26 Jun 2012

- Expensive bond auctions for Italy and Spain
- Consumer confidence rising in Germany
- Stocks end mostly down

FTSE 100: -0.07%
Dax 30: +0.07%
Stoxx 600: -0.07%
Cac 40: -0.30%
Ibex 35: -1.44%
FTSE MIB: -1.11%

Bond auctions in both Italy and Spain pushed yields higher for the under-pressure euro area nations on Tuesday but German consumer sentiment was predicted to improve on the closely followed GfK index.

On debt markets Italy sold nearly €3bn worth of zero-coupon securities with a 2014 maturity. The yield was 4.71%, versus 4.04% seen at a similar auction at the end of May,

Spain sold €3.08bn in three-month bills for a yield of 2.36% compared to 0.85% in May. Although Spain beat its target at the auction, the yield looks extremely high.

European leaders meet later this week to try and agree the next steps to combat the ongoing debt crisis, but according to reports in the Financial Times Germany is still highly unlikely to agree to so-called “eurobonds”, a common bond jointly issued by all 17 members of the currency block.

In Germany the market research organisation GfK said its index of consumer confidence, which surveys around 2000 people, would rise to a reading of 5.8 next month, from 5.7 in June. Economists had been expecting a fall.

COMPANIES

Utilities was the strongest sector on the Stoxx Europe 600, rising 0.8%, automobiles and parts was the weakest, dropping 1.44%.

Unsurprisingly, the biggest climbers in Germany were electricity and gas firms, E.On and RWE. In Paris, infrastructure companies, Vallourec and GDF Suez led the way.

OTHER MARKETS

Futures contracts for front month delivery of Brent crude had gained 0.74% by 16:40 to hit $91.68 per barrel.

The euro was down 0.24% against the dollar at 16:52 at $1.2474.

BS

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