Italian Bonds Drop After Auction

Notes sold at 6.98% yield, a level that is seen as unsustainable.

Italian 10-year bonds fell, pushing yields toward the highest this month, after the nation raised less than its maximum target at an auction of debt due between 2014 and 2022.

Portuguese and Spanish securities also declined and the euro weakened to a 15-month low against the dollar after Italy agreed to pay a yield of 6.98 percent on securities maturing in 2022, close to the 7 percent level that prompted euro-area peers to seek bailouts. German two-year yields fell to match a record low and bunds climbed for a third day as a government report showed inflation slowed in December.

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