GREECE AND WORLD: Premarket: Now Germany can't sell bonds

SONALI VERMA

Globe and Mail Blog

Posted on Wednesday, November 23, 2011 6:54AM EST

What is the world coming to when even Europe's strongest economy has trouble selling bonds? Stocks reflected nervousness after one of Germany's worst debt auctions in more than a decade and data showed Chinese manufacturing shrank sharply.

Banks and miners were among the biggest losers. Britain's FTSE 100 lost 0.3 per cent, France's CAC 40 edged 0.1 per cent lower and Germany's DAX inched 0.2 per cent higher. Hong Kong's Hang Seng slid 2.1 per cent.

Dow futures were down 93 points, or 0.8 per cent, at 11,372 about two and a half hours before the New York Stock Exchange opened. S&P 500 futures fell 7.7 points, or 0.7 per cent, to 1,175.10.

Commodity currencies, such as the Canadian dollar and the Australian dollar fell. The loonie was trading at 95.95 U.S. cents as the U.S. dollar rallied to its highest against a basket of major currencies in seven weeks.

One of Germany’s worst bond sales since the launch of the euro sparked concerns the debt crisis was even beginning to threaten Berlin.The Bundesbank was forced to buy 39 per cent of the 6 billion euros of debt Germany had hoped to sell to investors after banks bought just 3.644 billion euros of the issue.

Yields on 10-year German Bunds surged 5.5 basis points to 1.964 per cent. Italian and Spanish bond yields dipped after reports of intervention in the bond markets from the European Central Bank.

Germany’s debt agency said the shortfall in the sale reflected worsening market nerves and that it would sell back the retained amount to investors on secondary debt markets and that Germany would not face a funding shortage.