Spanish Bonds Decline Before Auction

By Stephen Kirkland and Lynn Thomasson - Dec 13, 2011 5:28 PM GMT+0700

European stocks gained after German investor confidence unexpectedly increased and Spain sold more debt than planned at an auction. U.S. index futures advanced before a report that may show American retail sales increased last month.

The Stoxx Europe 600 Index added 0.3 percent at 10:25 a.m. in London. Standard & Poor’s 500 Index futures gained 0.5 percent. The yield on the Spanish two-year note fell 13 basis points to 4.35 percent. The 10-year Italian yield rose 12 basis points, after climbing as much as 19 basis points.

The ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations increased to minus 53.8 from a three-year low of minus 55.2 in November. Spain sold 4.94 billion euros ($6.5 billion) of bills, more than the maximum target of 4.25 billion euros. Sales at U.S. retailers probably rose 0.6 percent last month, economists said before a Commerce Department report.

The ZEW data show “the first monthly uptick since the start of the year and it suggests some stabilization in future expectations after the ‘panic’ decline due to the worsening of the European Monetary Union debt crisis,” Annalisa Piazza, a strategist at Newedge Group in London, wrote in a report.

Three stocks advanced for every one that declined in the Stoxx 600. Lagardere SCA, France’s biggest publisher, advanced 4.3 percent after Deutsche Bank AG upgraded the shares. Whitbread Plc sank 6.4 percent as the U.K. owner of Premier Inn budget lodges and Costa Coffee shops reported a slowdown in revenue growth.

EFSF Debt Sale

German bonds declined, driving the 10-year yield up four basis points, with the two-year note yield rising three basis points. European Financial Stability Facility, the region’s temporary bailout fund, plans to sell as much as 2 billion euros of 91-day bills today, while Greece and Belgium also auction short-dated securities.

The U.S. 10-year Treasury yield increased two basis points to 2.03 percent before the government auctions $21 billion of the securities, the second of four sales of coupon-bearing debt this week. A three-year sale yesterday drew record demand as investors sought a haven from Europe’s debt crisis.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net