STOCK MARKET WATCH - Thursday, 5 January 2012

[Ghost Dog]

64. French costs rise but demand solid at debt sale

(Reuters) - French borrowing costs rose slightly when the euro zone's second-largest economy sold debt for the first time this year on Thursday but demand was solid despite concerns the country could lose its AAA credit rating...

... France sold 7.96 billion euros (5.7 billion pounds) of 10- to 30-year bonds at the auction, at the top of its projected range, after receiving total bids for nearly 15 billion euros.

The yield on the benchmark October 2021 bond rose slightly to 3.29 percent to above the 3.18 percent fixed when it was last auctioned on December 1, but remained in line with yields in the secondary market of around 3.3 percent.

The 10-year spread over Bunds was a whisker higher after the auction at 143 basis points, remaining well below its euro-era high of more than 200 basis points reached in November.

"Overall it's a pretty solid auction," Michael Leister, strategist at DZ Bank in Frankfurt. "It should be enough to dispel concerns with regards to France's funding capacity for the time being."

/... http://uk.reuters.com/article/2012/01/05/uk-france-bonds-idUKTRE8040E820120105