Spanish bonds gain on 10-year bond sale, political instability

The Spanish government bonds gained as investors showed strong demand for a new 10-year Spanish bond. Also, rising concerns that the Spain may have to go back to the polls for a third time in a year drove investors towards safe-haven buying.

The yield on the benchmark 10-year bond fell 6 basis points to 1.184 percent, the yield on long-term 30-year note dipped 4-1/2 basis points to 2.296 percent and the yield on short-term 3-year note slid nearly 1 basis point to -0.050 percent by 11:20 GMT.

According to Reuters, the IFR said Spain would sell 6 billion Euros of the bonds. Also, analysts had been expecting for a few weeks that Spain would launch a new syndicated bond deal to take advantage of a recent fall in borrowing costs.

Moreover, the Spain’s Socialist leader reaffirmed to support conservative People's Party to form a government, raised concerns that the country could go for a third poll in a year. Mariano Rajoy, an acting prime Minister, won 137 seats, which was lower than the majority need of 176 seats in the parliament.

Meanwhile, the IBEX 35 trading down 0.73 percent at 8,462.5 by 12:00 GMT.