European debt fears ease after Portugal sells bonds

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Financially ailing Portugal on Wednesday successfully sold longer-term bonds, providing temporary relief to markets that had feared a worsening of Europe’s government-debt crisis.

Portugal was able to sell $778 million of 10-year bonds at an annualized yield of 6.72%, below the market yield of 6.90% on previously issued 10-year securities on Tuesday.

The country also sold four-year bonds at a yield of 5.40%.

Investors in the last few months have demanded ever-higher yields on bonds of many of the euro-zone’s financially weakest countries, raising fears that more governments would follow Greece and Ireland in seeking bailouts from the European Union.

Portugal has been widely considered to be the next likely domino to fall, even though the government has insisted it wouldn’t need a bailout.

The European Central Bank had jumped into the euro-zone bond market in recent days, buying bonds of Portugal and other troubled countries in an effort to pull down yields. That helped provide a supportive backdrop for Wednesday’s sale, traders said.

European stock markets rallied sharply Wednesday and the battered euro rose against the dollar. U.S. stocks also were broadly higher.

Next up: Italy and Spain will hold bond auctions on Thursday.

Later Wednesday the U.S. Treasury will offer $21 billion of 10-year notes for sale.

-- Tom Petruno