Spanish, Italian Bonds Slide on Debt Concerns; Bunds Advance

Spanish and Italian bonds slid after Italy’s borrowing costs surged to the highest level since June 1997 at a note sale, fueling concern the region’s debt crisis is worsening.

The extra yield investors demand to hold Spanish bonds instead of German bunds widened to a euro-era record after European Central Bank Governing Council member Jens Weidmann suggested policy makers should end their support of the region’s most indebted nations. Europe’s banks need to sell more Italian bonds to avoid being sucked into the debt crisis, said Christian Clausen, president of the European Banking Federation. German two-year yields dropped to a record low.