Taiwan’s dollar weakened for the first time in three days and government bonds rose after Italian borrowing costs jumped at an auction, fanning concern Europe’s debt crisis will worsen. The island’s benchmark stock index declined after Italy sold 3 billion euros ($4.1 billion) of five-year bonds at a yield of 6.29 percent yesterday, the highest since June 1997. Taiwan’s dollar has weakened 0.9 percent this month as foreign funds sold $421 million more local shares than they bought, according to exchange data. “The poor Italian bond sale result has reignited some risk-off sentiment in the market,� said Albert Lee, a Taipei- based fixed-income trader at Cathay United Bank Co. Taiwan’s dollar fell 0.2 percent to NT$30.21 against its U.S. counterpart, according to Taipei Forex Inc. The yield on the 2 percent bonds due July 2016, the most-traded government securities, declined one basis point, or 0.01 percentage point, to 1.029 percent, prices from Gretai Securities Market show. Government debt held gains after the government sold NT$30 billion ($994 million) of 30-year bonds today at a yield of 1.9 percent, compared to the 1.95 percent median estimate traders predicted in a Bloomberg survey. The sale attracted bids for 2.11 times the amount on offer, up from 1.96 times at the last 30-year sale in August. “Insurers and the post office should have big demand for the 30-year bonds,� he said. The overnight money-market rate, which measures interbank funding availability, was little changed at 0.399 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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