Spreads down, markets up after German high court ruling

Italian spread down to April levels, Spanish below 400

Spreads down, markets up after German high court ruling

(ANSA) – Milan, September 12 – Bond spreads fell and markets rose Wednesday on news that Germany's highest court tossed out motions aimed at blocking the creation of the permanent European rescue fund, the European Stability Mechanism (ESM). The German Constitutional Court gave a green light to the ESM as long as it does not oblige Germany to fork over more funds than it has already committed, and the court ruled against funding the ESM through the European Central Bank, saying the move would violate European treaties. The difference between interest rates on Italian and German bonds closed at 339 basis points, the lowest spread since April 3 and down 12 points from Tuesday. The yield on Italian 10-year bonds was 5%. The spread between Spanish bonds and the German benchmark slipped under 400 to close at 394 basis points, with the yield on 10-year Spanish bonds at 5.55%. Stock markets in Milan (+1.19%), Madrid (+0.78%) and Athens (+5.33%) closed in positive territory, as did to a lesser extent Frankfurt (+0.46%) and Paris (0.29%). London (-0.17%) closed slightly down.

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