AlHijjah 1, 1433, Oct 17, 2012, SPA - The euro touched a one-month high against the dollar and Spanish government bond yields fell sharply on Wednesday after Spain clung on to its investment-grade debt rating, Reuters reported. The decision by ratings agency Moody's came as expectations grow that Spain is close to formally requesting aid from its European Union partners, potentially allowing the region's central bank to begin buying its bonds. The euro was up 0.3 percent at $1.31, having earlier hit $1.3125, its highest level since Sept. 17, while Spanish government 10-year bond yields dropped 24 basis points to 5.57 percent. "It is a major surprise. I think the market was positioned for a downgrade. The only question for markets was (would it be) one notch or more," said Piet Lammens, strategist at KBC Bank. But investors remain cautious ahead of a meeting of European leaders in Brussels on Thursday and Friday, where there is always the potential for public disagreement over the next steps to resolve the region's three-year old debt crisis. The two-day summit, the fourth among the 27 EU leaders this year, is meant to focus on efforts to establish a single supervisor for the euro zone's banks, as well as longer-term plans for closer integration of the currency union.
