Mounting hopes that European Central Bank president “Super” Mario Draghi will this week step in to save the eurozone gave fresh relief for struggling Italy and Spain today.
Optimism about further aid meant Italy this morning was able to tap bond markets for €5.5 billion
(£4.3 billion) at 5.29% - a slightly lower rate than in previous auctions. Spain, whose own debt costs hit an eyewatering 7.5% last week, is now being charged 6.49% to fund itself for 10 years.
The rally comes after Draghi’s recent pledge to do “whatever it takes” to save the euro was backed up by a host of senior European politicians over the weekend.
Following the heavy hints, pundits now expect the ECB to offer fresh long-term loans to the banking system or restart its temporary programme of buying sovereign bonds in troubled countries - a process used to quell market turmoil a year ago.
Shares gained today. Deutsche Bank’s Jim Reid: “It seems likely the markets will remain fairly buoyant ahead of Thursday’s meeting.”
