MADRID |
MADRID (Reuters) – Spain and Italy spread cheer through euro zone markets on Thursday with successful debt auctions at sharply lower borrowing costs in 2012′s first real test of appetite for debt from the euro zone’s bruised periphery.
The Spanish Treasury raised 10 billion euros ($12.7 billion) from the auction of three bonds, doubling its target of up to five billion, and yields dropped by about 1 percentage point.
Italy also fared well, paying less than half what it did a month ago to sell one-year bills at its first auction of the year.
European shares extended gains in response and the euro currency rose to a session high.
Domestic banks continued to lend support thanks to ultra-cheap funding from the European Central Bank, which provided banks with nearly half a trillion euros of three-year money late last year and will make a similar offer in February.
“Basically the only reason this has been taken down so well is abundant ECB liquidity and with another one
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