* Euro zone yields higher ahead of U.S. data
* Moody's reviews Portugal; DBRS reviews Ireland
* Spain's Rajoy faces second vote of confidence
* Spanish yields set for biggest weekly rise since Dec
By Dhara Ranasinghe
LONDON, Sept 2 Euro zone bond yields crept
higher on Friday in the run-up to potentially market-moving
events including a Moody's ratings review of Portugal and a
second parliamentary vote of confidence in Spain as well as U.S.
Irish bond yields touched one-month highs
before a ratings review by DBRS, with focus on any implications
from the European Commission's ruling this week that Apple
should pay 13 billion euros ($14.55 billion) in back taxes to
Earlier this week Standard & Poor's said the windfall could
help Ireland cut its debt significantly but may undermine the
Ratings agency Moody's is expected to review Portugal and
Commerzbank says the stable outlook is at risk. Portuguese bonds
came under pressure last month after DBRS warned that pressures
were building on the country's creditworthiness.
DBRS' deliberations on Portugal are significant because it
is the only one of the four agencies recognised by the European
Central Bank (ECB) that gives Portugal the investment grade
rating it needs to qualify for the bank's quantitative easing
Any downgrade in Moody's assessment of the outlook for
Portugal's rating could fuel concerns about the DBRS rating,
which is due for review in October.
"Even if Moody's view on Portugal's rating is left unchanged
there could be some negative comments on the government's fiscal
plans and this could fuel speculation about the DBRS decision,"
said Daniel Lenz, a strategist DZ Bank.
"We remain cautious about Portuguese bonds."
Portugal's 10-year yield rose 1 basis point to 3.08 percent
, having risen almost 40 basis points since
Across the euro zone, yields were about 1 bps higher on the
day as jitters set in ahead of Friday's U.S. non-farm payrolls
report - seen as key gauge for whether the Federal Reserve could
pull the rate-hike trigger this month.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Spain's 10-year bond yield was marginally
higher at around 1.07 percent and on track for its biggest
weekly rise since last December.
The country, the euro zone's forth biggest economy, has been
without a functioning government since December and a failure to
break the political impasse has prompted investors to turn more
Chances of a third election in a year increased on Wednesday
when acting Prime Minister Mariano Rajoy of the conservative
People's Party (PP) lost a first parliamentary confidence vote
on his bid for a second term in office.
A second vote takes place on Friday and a simple majority
would be enough to form a PP-led minority government. If Rajoy
loses the vote, he has two months to try to form a government
before triggering another election -- which could fall on
"Unlike the previous one, this ballot only requires a simple
majority but comments so far from the Socialist leader suggests
that his party will not abstain and thus that the vote will
fail," analysts at Mizuho said in a note.
($1 = 0.8932 euros)
(Reporting by Dhara Ranasinghe; editing by John Stonestreet)