Spain Bonds Drop Amid Bailout Concern

Spain’s bonds fell, pushing five-and 10-year yields to euro-era records, as the nation’s borrowing costs rose at an auction amid concern its banks’ and regions’ debts will force it to seek a sovereign bailout.

Italian bonds declined for a third day after services and manufacturing in the euro region shrank in July. Germany’s bunds sank, pushing up yields from near all-time lows, after Moody’s Investors Service cut the outlook on the nation’s top rating citing concern it will have to support weaker euro-region members. Government debt from the Netherlands fell as its outlook was also lowered by Moody’s, along with Luxembourg.