Peripheral yields are steady ahead of Spain's auction Thursday of EUR1 billion to 2 billion of 2-, 3- and 5-year debt at 0800 GMT, which will test Wednesday's tightening of peripheral spreads. The rally was fueled by rumors that the EFSF and ESM could buy bonds to bring yields back down from unsustainable levels, though this was denied by European officials, according to Royal Bank of Scotland. Further speculation surrounding steps to tackle the debt crisis to be discussed at upcoming summits will likely remain the main driver of sentiment. Spanish 10-year yields are up 1bp at 6.71%, while Italy is 4bps higher at 5.79%, after clearing house LCH.Clearnet raised margin requirements on some Italian bonds.
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