Ireland's borrowing cost below 9%

IRELAND’S COST of borrowing dipped below 9 per cent for the first time since February yesterday, indicating markets continue to respond positively to the country’s economic reform plans.

The yield on 10-year Irish government bonds, considered the benchmark for national borrowing, fell by 13 basis points to 8.99 per cent, the first time it has dropped to less than 9 per cent since February 10th. Ireland is now steadily putting some distance between itself and the other bailed-out European countries.

The cost of Greek borrowing hit a new euro-era record yesterday – the yield on 10-year bonds rose by 45 basis points to 18.34 per cent – on fears the country may default due to terse talks on its second bailout deal. Portuguese 10-year bond yields remain elevated at 11.18 per cent.

The ECB was once more in the market for Spanish and Italian bonds, pushing the yield on Spanish 10-year bonds down by two basis points to 4.99 per cent, and keeping Italian 10-year yields steady at 5.05 per cent.

The spectre of short-selling restrictions becoming permanent overhung equity markets. Italy, France, Spain and Belgium extended their bans, but hinted the curbs could be lifted by October.

In Germany the DAX fell on speculation it would broaden its short-selling restrictions, closing down by 1.7 per cent. In Paris the CAC 40 was down by 0.7 per cent, while the FTSE 100 gave up 1.4 per cent in London. The Irish market was down 0.9 per cent.

In the US markets rose on the back of news that Warren Buffett was pumping $5 billion into Bank of America, but fell back again after an unexpected increase in US jobless numbers. Apple was trading down by 1.2 per cent yesterday after earlier giving up 7 per cent on the back of Steve Jobs’s resignation as chief executive.

Today markets will look to Jackson Hole, Wyoming, where Federal Reserve chairman Ben Bernanke is due to speak. However expectations were dimming yesterday that he will announce additional market stimulus through asset purchases. – (Additional reporting Bloomberg)