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Germany questions ECB rescue plan; Spanish bond yields rise

Germany questions ECB rescue plan; Spanish bond yields rise

13.15: Spanish bond yields moved up as questions have arisen about the legality of proposed bond buying programmes from the European Central Bank (ECB) in its efforts to stem the eurozone sovereign debt crisis.

Reports that Germany’s Bundesbank has called for an inquiry into the legality of the ECB’s plans for bond purchases under Outright Monetary Transactions (OMT) have stirred up peripheral bond markets, as prolonged purchases could breach EU treaties.

The yield on Spanish 10-year bonds rose 4 basis points to 5.71% in Tuesday afternoon trade following an auction of three-month bills, at significantly higher yields of 1.2%, up from 0.94% at the end of August.

Spain is in talks with the European Commission and is expected to unveil plans for economic reform on Thursday. It has been speculated that the country could also make a late request for a bailout from the European Stability Fund (ESF), which would kick-start the ECB’s bond buying programme.

FTSE ticks up as German consumer confidence steadies

 

08.20: Britain’s FTSE 100 opened flat as consumer confidence in Germany, the engine of eurozone growth, failed to improve in September.

The FTSE 100 shed 3.6 points, or 0.05%, to 5,837 points and the FTSE 250 gave up 2 points, or 0.03%,to 11,901 points.

A survey of German consumers revealed they are cautious on the outlook for the country’s economy, as actions taken by the European Central Bank haven’t impacted on consumer confidence in the country.

In the UK newspaper group Daily Mail and General Trust (DMGT.L) released full year profits in line with expectations.

Diageo (DGE.L), meanwhile, is in talks with Indian company United Spirits to buy a stake in the business.

Commodity trading giant Glencore (GLEN.L) scaled back its plans to take a larger stake in Kazak zinc producer Kazzinc, reducing its stake to 70% for less cash.

Investment group Close Brothers (CBRO.L) announced full-year adjusted operating profits increased 2% to £134.2 million in 2012.

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