Markets: Spanish bond sale fails to lift bourses

Major markets were weaker yesterday despite solid demand for Spanish bonds, with investors spooked by softer-than-expected US economic data.

Spain sold some €2.5 billion (£2.1bn) in twin bond auctions, at the top end of the targeted amount. But yields on the key ten-year bonds nudged higher, at just below the 6 per cent mark, reflecting fears that the country may miss budget deficit targets, as well as concerns about its banking sector.

Meanwhile, progress was thwarted by dull US data after it emerged that the number of Americans claiming unemployment benefits for the first time fell only slightly last week, while factory activity in the Mid-Atlantic region slowed sharply this month.

London’s benchmark FTSE 100 Index closed barely unchanged, just 0.7 points lower at 5,744.55. Germany’s Dax fell almost 1 per cent and France’s Cac-40 slid 2 per cent.

Michael Hewson, senior market analyst at CMC Markets, said: “A relatively successful Spanish ten-year auction proved some relief, but given the small amount of money to be raised it was never likely to be a significant market mover.

The mixed result at the Spanish auction was reflected in London’s banking stocks, with Barclays and Royal Bank of Scotland dropping 1.9p to 212.3p and 0.6p to 23.8p respectively.

Investment manager Hargreaves Lansdown rose nearly 6 per cent, to 508.5p, topping the risers’ board after posting a strong third-quarter update, revealing that its assets under management had increased to a record level.