LONDON Dec 22 Italian and Spanish 10-year
government bond yields rose in opening trading on Thursday
following reports of a possible state bailout for ailing Italian
lender Monte dei Paschi di Siena.
Monte dei Paschi has all but failed to pull off a
last-ditch rescue plan and a state bailout for the ailing
Italian bank now looks inevitable, sources told Reuters on
Italy's 10-year government bond yield was up 2 bps to 1.84
percent by 0815 GMT, while the Spanish equivalent was up a
similar amount to 1.34 percent.
"A bailout in itself is good news, but the big question is
whether it is in line with European law," said DZ Bank
strategist Daniel Lenz. "It's an open question whether there
will be a solution everybody is fine with."
EU rules require that bond holders are tapped first in any
bank bailout before taxpayer cash, if its more that 1 billion
euros, can be used.
(Reporting by Abhinav Ramnarayan, Editing by Marc Jones)