5 Feb 2013

Spanish bond yields rise amid corruption allegations

2:53 pm on 5 February 2013

Spanish government bond yields have risen sharply following calls for the prime minister to resign over an alleged corruption scandal.

Investors are wary about political uncertainty, sending yields on 10-year government bonds close to 5.5% on Monday.

Prime Minister Mariano Rajoy has fiercely denied corruption allegations following newspaper published images of documents allegedly showing secret payments to members of his Popular Party (PP).

Speaking alongside German Chancellor Angela Merkel in Berlin, Mr Rajoy said his government remained strong and would overcome the accusations, which have sparked protests and an online petition for his resignation signed by 850,000 people, the BBC reports.

"The government is stable. The PP has a majority," Mr Rajoy said. "It's carrying out its agenda based on reforms."

Mrs Merkel said Germany would support the Spanish government's efforts.

Italy's borrowing costs also rose, with 10-year bond yields rising to about 4.5% after a poll indicated rising support for former prime minister Silvio Berlusconi.