Treasuries Drop as Spanish Bailout Call Saps Safey Demand

Treasury 30-year bonds gained for the first time in six days on speculation a bailout of Spanish banks will provide only a short-term solution to the European sovereign-debt crisis.

U.S. government securities erased earlier losses as Spanish and Italian bonds slid on bets the 100 billion euros ($125 billion) of aid for Spain’s banks won’t be enough to stop turmoil from spreading. Treasuries had dropped earlier as stocks advanced, luring investors to higher-yielding assets. The U.S. will auction $66 billion of notes this week, starting with $32 billion of three-year securities tomorrow.