euroThursday bond auctions which were carried out in France and Spain witnessed a decline in borrowing costs in the first case and a solid demand in the second, which caused most European stocks to rise. The UK held a very successful auction, at which 4-year bond yields fell to a historic low.

Spain sold 6.61 billion euro of various bonds out of a 3.5-4.5 billion euro target. The yield on 10-year papers rose to 5.40%. the country also sold 7-year bonds at a yield of 4.54% as well as notes maturing in October 2017 at a yield of 4.02%. EUR/USD hasn´t moved much after the auction, but as Gerry Davies from Forex Live remarks: “The good results had been widely anticipated (hence the EUR/USD buying beforehand) and we seem to have seen a classic "buy the rumour, sell the fact" price action.”

Meanwhile, at its first debt auction since S&P's downgrade last Friday, France managed to sell 7.965 billion euros worth of bonds out of target of 6-5.-8.0 billion. The country's 10-year bond yields fell three basis points to 3.11%.

Still the most successful auction held on Thursday in the EU was the one which took place in the UK. The country managed to sell 4 billion pounds of debt. Bids exceeded supply twice over and 4-year bonds were sold at the lowest yield ever of 0.893%.

Fitch expects more downgrades among six EU countries on negative watch


Earlier on Thursday Fitch rating agency warned that the majority of EU countries the ratings of which were put on review will witness a one to two notch downgrade at the end of January.

The countries in question are Spain, Italy, Cyprus, Belgium, Slovenia and Ireland. The rating agency is at present evaluating the risks for their economies, the evolution of their growth perspectives and the effectiveness of austerity measures implemented by the governments.