Milan – Italian and Spanish bond spreads narrowed Tuesday as markets hotly awaited the German Constitutional Court’s decision due Wednesday on whether the European bailout is consistent with German law. Support among German leaders for anti-spread efforts led by European Central Bank President Mario Draghi gained more vocal support Tuesday.
Ex-Chancellor Gerhard Schroeder said, „Mario Draghi’s intelligent decision is keeping the eurozone together” in an interview published in Handelsblatt.
His comments followed support expressed by Germany’s current Chancellor Angela Merkel. Last week German Finance Minister Wolfgang Schaeuble expressed confidence the Constitutional Court ruling would not scupper the European Stability Mechanism. The difference between interest rates on Italian and German bonds closed down at 351 basis points Tuesday with the yield on Italian ten year bonds at 5.05%.
The Italian-German bond spread had closed at 363 basis points on Monday.
The spread between Spanish and German bonds closed Tuesday at 410 basis points, down five basis points from Monday’s close.
The yield on ten year Spanish bonos’ was 5,63%. European stock markets did better Tuesday after a wilting performance on Monday.
Frankfurt’s DAX (+1.34%), Milan’s FTSE MIB (+0.83%), Madrid’s IBEX (+0.93%), and Paris’s CAC 40 (+0.89%) ended soundly in positive terrain, though London’s FTSE-100 (-0.02%) was flat. Milan’s FTSE MIB hit its highest level since March, closing at 16,226 points.
The Milan stock market started the day downward, but picked up in the middle of the trading session, spurred on by Wall Street’s bullish performance.
Italian banks did well, but luxury goods suffered from a profit warning issued by Burberry’s in the United Kingdom.
The market punished Ferragamo (-5.08%), Tod’s (-3.52%) and Luxottica (-1.72%). (Ansa)
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