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

Spain: 5.94% (-1bp)
Italy: 5.09% (-3bp)
France: 2.17% (-3bp)
Germany: 1.44% (-1bp)
UK: 1.73% (n/c)
US: 1.64% (-1bp)

There are 100 basis points (bp) to a percentage point

US Treasuries saw gains trimmed after the Spanish banking stress test results were published. The Spanish government said that the capital needs of the country's financial system amount to just €59.3bn, less than many pundits had expected.

Early in the day US Treasuries had hardened on the back of a slew of economic data.

US personal consumption expenditures (PCE) in August were up 0.5%, in line with expectations, after rising 0.4% in July.

However, personal income was up 0.1%, slightly below expectations of a 0.2% increase. The July reading was revised to show a 0.1% gain from 0.3% previously. The personal savings rate fell to 3.7% from 4.1% in July.

The Core PCE index rose 0.1% in August, as expected. Core prices were up 1.6% from a year earlier, versus a 1.3% annual increase in July.

The notoriously volatile regional Chicago NAPM manufacturing sector purchasing managers' index for the month of September came in at 49.7 (Consensus: 53), after a reading of 53 for the previous month. The new orders sub-index reading was 47.4 (from 54.8) while the prices paid sub-index has printed a reading of 63.2 (after 57 in August).

The University of Michigan's gauge of consumer confidence for the month of September has come in at 78.3 (Consensus: 79) after the previous month's reading of 79.2. The current situation sub-index fell to 85.7 from 88.3 (Consensus: 88), but the expectations component actually rose; to 73.5 from 73.4 (Consensus: 73). Inflation expectations one and five years out dropped noticeably.

Considering the cavalcade of economic announcements Spain has had to endure over the last two days, Spanish bonds were remarkably stable.

French bonds, meanwhile, rose after France unveiled what Finance Minister Pierre Moscovici called a "fighting budget".

In the UK, gilts had a quiet day even after some pundits suggested the UK economy might be pulling out of its slump.

Consultancy GfK´s consumer confidence gauge for the month of September rose by 1 point in September to -28, when economists had been expecting a one point movement the other way.

The increase in the index comes after it was unchanged for four consecutive months and could mark the start of an improvement in consumer confidence after an extended period of weakness, commented analysts at Barclays Research.

At the same time, the squeeze on household incomes appears to be easing, with real household disposable income growing by 1.9% quarter-on-quarter in the second quarter of 2012.

Nevertheless, added Barclays, we would need to see a sustained increase in sentiment before being confident that there has been a shift in consumers' mood. "We expect the recovery in household consumption to be gradual and see continued downside risks from stronger inflation and events in the euro area," Barclays said.

JH

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