These were the yields and basis point movements of some of the most watched 10 year bonds by the close in Europe:

Spain: 6.40% (-16bp)
Italy: 5.51% (-15bp)
France: 2.24% (+2bp)
Germany: 1.48% (+4bp)
UK: 1.64% (+2bp)
USA: 1.58% (+1bp)

The bonds of Spain and Italy rose sharply on Wednesday as leaks gave markets some visibility on the shape of the European Central Bank's plans to bring down the interest rates Spain and Italy have to pay to borrow money.

It appears, at a crucial meeting tomorrow, the ECB will decide to begin an "unlimited" program of bond buying of countries which formally request assistance.

Once a request is made the ECB will begin the country's buying debt in the open market.

To offset concerns over inflationary risks, the ECB will also take money out of the system. This process, called "sterilisation", could be done through taking in deposits from banks or by the ECB selling some kind of security. The point is, whatever goes into the system through bond purchases, must be sucked out.

Markets have reacted by buying Italian and Spanish debt, pushing their respective yields down.

BS

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