Spanish Debt Auction; Euro-Area CPI - 17.4.2012

The euro gained some ground against the dollar and the yen in European trading as positive news came from the euro region: at an auction of short-term government debt Spain sold more than its maximum target, while business confidence in Germany rose more than expected, according to the Center of European Economic Research. An index of investor and analyst expectations for the major European economy increased to 23.4 from 22.3 in March. Another report from the Eurostat showed the euro-area annual inflation was stable in March at 2.7%. Today Spain sold 12-month and 18-month bills testing investor confidence in nation’s public finance. According to the central bank, the amount of debt sold exceeded the maximum target of 3 billion dollars. However average yields resulted to be higher compared to previous auctions. On the other hand the benchmark 10-year notes yields fell back below 6% after rising yesterday to 6.16%, the highest since the beginning of December 2011. The single currency dropped yesterday to a two-month low of 1.2995, but recovered in the aftermath above 1.31. In one of the recent speeches Spanish Prime Minister Mariano Rajoy underlined the need to reduce Spain's budget deficit in order to maintain access to financing. Two days later Spain will hold another auction of notes maturing in 2014 and 2022. In European trading hours the euro is trading close to 1.3150 against the dollar.