Spanish Shares Open Higher As Bond Yields Collapse

Spain's stock market rose in early trading Monday, despite losses elsewhere across the world, amid expectation the European Central Bank may purchase Spanish and Italian government bonds.A Madrid-based trader said the ECB news, which has resulted in a collapse in Spanish bond yields, is the main reason for the bounce after last week's selloff. At 0710 GMT, the country's blue-chip index was up 2.2% at 8,862.7.Spanish bank stocks, among the worst losers in recent days, led the rebound. The shares of the country's two largest banks, Banco Santander SA (STD) and BBVA SA (BBVA.MC), were both over 4% higher in heavy-volume trading. More than 11 million Santander shares had been traded at that point, compared with just two million shares of Telefonica SA (TEF), Spain's largest company by market value.The...

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ECB intervention brings early relief to European stock markets

European stock markets shrugged off fears of panic on Monday morning, with the Spanish and Italian stock indices rising as their government's debt costs fell.The Italian FTSE MIB index was up 2.8% this morning, while Spain's Ibex 35 rose 2.6%, defying predictions of a heavy selloff following S&P's downgrading of the US credit rating on Friday night.In the City, the FTSE 100 fell 66 points at the start of trading this morning, but swiftly reversed as traders become more confident. By 8.25am the blue chip index was in positive territory by 8:25, up 18 points at 5,265 as widespread fears of further panic selling on the markets failed to materialise.Italy and Spain's borrowing costs also fell, after the European Central Bank said it would intervene by buying up the two countries' debt. Bond...

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Banks that were perceived to have heavy exposure to Greece were penalized

“Banks that were perceived to have heavy exposure to Greece were penalized,” said John Stopford, the London-based head of fixed income at Investec Asset Management Ltd., which manages more than $90 billion. “Now, maybe people will be more worried about exposure to other parts of Europe.”A benchmark index of credit-default swaps on European banks and insurers climbed as much as 23 percent last week to a record 218.5 basis points on Aug. 5, according to JPMorgan Chase & Co. The extra yield investors demand to buy bank bonds instead of benchmark German bunds is now 231 basis points, or 2.31 percentage points, the most since Jan. 20, Bank of America Merrill Lynch data show.Bondholders are assigning a higher perceived risk to bank debt on concern that last month’s second Greek bailout won’t...

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