Markets: £1bn Portuguese bond auction boosts markets

UPDATE 12pm: The FTSE is up a third of a percent and other key European markets have jumped 1.3% on news Portugal has succeeded in raising £1bn in a bonds auction, easing concerns over the country's need for an EU bailout.

The debt-ridden nation, which is struggling to convince investors it can avoid a rescue, has succeeded in raising €1.249bn (£1.04bn) in an auction of 2014 and 2020 bonds launched at 10:3am in London today.

London's index of 100 leading shares was up 0.3%, or 17.83 points, to 6,031.86 points on the news.

Across Europe, the German Dax jumped 86.13 points, or 1.24%, at 7,027.70.

In France the Cac also soared, rising 48.77 points, or 1.26%, to 3,910.69.

The yield, or the interest rate Portugal must pay to borrow funds, on the 10-year bond was an average 6.719%.

Yields had hit a recent fresh high on its 10-year bonds of 7.3%, before falling to 6.77% on Wednesday morning before the auction.

Markets had been watching closely to see how easily - or not - the debt-hit nation could raise funds.

However Jeremy Cook, chief economist at World First foreign exchange says the Portuguese bond auction is merely "delaying the inevitable".

"I believe Portugal is destined to sign for EU aid by the middle of February.

"It has nearly €20bn worth of debt maturing this year and even with a huge amount of support from the ECB, in this and other auctions, the market is not satisfied.

"It looks increasingly likely that Germany and France will get their wish as the pressure continues to mount..."

Tomorrow, Spain will auction as much as €3bn of five-year bonds, while Italy will market €6bn of securities maturing in 2026 and 2015.