U.K. stocks erased their earlier gains as demand declined at an auction of Spanish debt.
The benchmark FTSE 100 Index rose 0.94, or less than 0.1 percent, to 5,451.59 as of 9:58 a.m. in London, having previously increased as much as 0.4 percent. The gauge fell 3.1 percent over the previous three days. The broader FTSE All-Share Index slipped less than 0.1 percent today, while Ireland’s ISEQ Index climbed 0.2 percent.
The FTSE 100 has declined 2.2 percent in the first half of the year amid concern Europe’s debt Crisis is derailing global growth. Stocks dropped yesterday on speculation this week’s European Union summit won’t lead to decisive measures to contain the debt crisis as German Chancellor Angela Merkel hardened her resistance to debt sharing.
“Markets are getting jittery now ahead of the summit of EU leaders at the end of this week and are wary they might be disappointed with the outcome,” Michael Crowley, a Dublin-based economist at Bank of Ireland Global Markets, wrote in a report. “The most the summit is likely to do is outline possible steps along the way towards creating the necessary construct to support monetary union. The euro area is still likely to remain in a crisis state for some time yet.”
Germany will face an increasingly united bloc of euro-area nations demanding more ambitious policies to help the currency zone’s most debt-stricken members. The leaders of the 27 EU states will attend pre-summit meetings as they work to narrow their differences before the June 28-29 meeting.
Spanish borrowing costs jumped as the nation auctioned 3.08 billion euros ($3.85 billion) of bills today.
Spain sold three-month bills at an average 2.362 percent, compared with 0.846 percent at the last auction on May 22, and six-month bills at an average rate of 3.237 percent, compared with 1.737 percent last month. Demand for the three-month securities was 2.6 times the amount sold, compared with 3.95 times in May, while the bid-to-cover ratio for the six-month bills was 2.82 compared with 4.3.