LONDON, Nov 7 (Reuters) - Spain’s government bond yields fell sharply on Wednesday, pushing the gap over safer German debt yields to its tightest in 3-1/2 weeks after a Spanish Supreme Court ruling that banks are not required to pay stamp duty on mortgages.
The Court’s decision late Tuesday spares banks from potentially having to reimburse billions of euros to borrowers who for years have paid the tax themselves.
As Spain’s stock market rallied 1.8 percent on Wednesday, the positive sentiment spilled over to bonds. Spain’s 10-year bond yields fell over 4 basis points to 1.56 percent , narrowing the gap over German Bund yields to around 110 bps - the tightest in 3-1/2 weeks. (Reporting by Dhara Ranasinghe; Editing by Tom Finn)