Stress Tests Pressure European Debt

Greek, Irish and Portuguese notes hit record yields ahead of bank test results.

Greek, Irish and Portuguese two-year notes led declines by securities from Europe’s most indebted nations, while German bunds rose before the publication of stress tests that may show European banks need more capital.

Yields on notes of the three nations to accept international bailouts reached euro-era records, while German 10-year yields headed for a second straight week of declines as investors favored the safest assets amid concern the region’s debt crisis is worsening. Regulators will release test results for 91 banks to help reassure investors that the region’s lenders have enough capital. Standard & Poor’s yesterday became the second ratings company this week to warn that it may cut the U.S.’s top credit grade.

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