Doubts push Spanish borrowing costs back up

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Ten-year Spanish government bond yields extended their rise yesterday, driven by pressure ahead of this week's auctions and lingering doubts over when, or if, Spain will seek financial aid.

A call for help from Madrid is a precondition to the European Central Bank's bond buying programme, but the government has been reluctant to make that call, especially after funding costs fell to more manageable levels.

Ten-year bond yields were up 13 basis points to 5.96 per cent, and one trader said: "There's some disappointment that Spain doesn't go ahead and outline any intention to apply for … aid. There's also supply coming out this week where, besides the new three-year, they'll also be tapping the ten-year as well and that's prompting some profit-taking."