Spain’s government bonds rose, with 10-year yields falling toward the lowest level since 2006, amid speculation the nation will attract demand for its proposed debt auction.

The state's 10-year debt advanced for the sixth time in seven days after Spain hired banks to sell bonds due in April 2024.

The government raised the most in two years at an auction last week. Italian and Portuguese securities also rallied as signs the euro area is emerging from its debt crisis fueled demand for the securities of its most indebted nations.

Germany’s 10-year bonds fell for the first time in five days.

"We will witness sufficient buying interest for the syndicated sale," said Felix Herrmann, a research analyst at DZ Bank AG in Frankfurt. "The recent normal auction went quite well. We are still optimistic in the medium and longer term for Spanish bonds. There is still a lot of room for spread tightening."

Spanish 10-year yields fell four basis points, or 0.04 percentage point, to 3.69 per cent today.

Spain is pricing the bonds it is selling at 178 basis points above the mid-swap rate, according to sources. The country sold €5.9 billion of debt due in April 2017, July 2026 and October 2028 on January 16th, the largest amount raised on a single day from a bond auction since January 2012.

Germany’s 10-year yield rose one basis point to 1.75 per cent after dropping nine basis points during the previous four days.

The nation allotted €3.52 billion of notes due in December 2015 today at an average yield of 0.15 per cent compared with 0.21 per cent at the previous December 11th sale.

Spain's bonds returned 13 per cent in the 12 months through yesterday, according to Bloomberg World Bond Indexes. Italy's rose 7.3 per cent and Germany's gained 0.4 per cent.

Bloomberg