By Simon Miller

Spain has beaten its bond auction target of €4.5bn (£3.62bn) today with €4.8bn raised this morning.

The 10-year bonds were sold at an average tiled of 5.666% compared with 6.647% on 2 August with €859m sold at a ratio of 2.8, 0.4 higher than the previous auction.

The country also got away €3.9bn of a new three-year issue with an average yield of 3.845%.

Analysts suspect the "Draghi effect" is continuing with investors expecting Madrid to go for the eurozone bailout - an action that Spain is resisting and resulted in a rise above 6% on the benchmark 10-year rate earlier this week.

Nicholas Spiro of Spiro Sovereign Strategy commented: "The relative ease with which the Treasury issued bonds today, and 10-year paper at that, says much about the enduring "Draghi effect". The ECB's verbal intervention alone is, for the time being, shoring up Spanish debt. Not only did the Treasury exceed its target today but the covers were fairly decent and the yield on the closely watched 10-year bond fell markedly."

Nick Stamenkovic at RIA Capital Markets said: "It seems to have proceeded pretty smoothly, they raised above the target, which is mildly pleasing. Overall the auctions today were taken comfortably but a sustainable decline in yields really depends on the Spanish government coming up to the plate and asking for a sovereign bailout."

Meanwhile, France got €8bn of debt away today with two-year notes yielding 0.2% compared with 0.54% in June while four-year note yield were also down to 0.53% from 1.05%.

However, there was a slight rise in five-year notes with an average yield of 0.98% compared with 0.86% at the last auction.

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