Markets have grown jittery about the euro zone's capacity to prevent Spain's fiscal woes in particular from spreading to other vulnerable peripheral euro zone economies, despite massive liquidity injections by the European Central Bank.
Spain's auction of a relatively modest 2.5 billion euros of two- and 10-year bonds will be the most closely watched after Madrid abruptly relaxed its deficit targets last month, sending longer term bond yields over six percent.
The Spanish bond auction will be well supported, said Gerry Celaya, chief strategist at Red Tower Research. But he sees the 10-year bond yields creeping back above 6 percent in the longer term as appetite for the debt fades, and this may see yields in other shaky peripherals such as Italy drift higher.
The euro was basically unchanged at $1.3130, while the dollar firmed against a basket of major currencies <.DXY>, pushing spot gold down 0.1 percent to $1,639.46 an ounce.
The MSCI world equity index <.MIWD00000PUS> was little changed, up 0.1 percent at 326.71, after uninspiring earnings from tech bellwethers IBM and Intel saw Asian stock markets end flat.
France is seeking to raise around 11 billion euros as investors grow increasingly concerned about the outcome of the two-round presidential election that starts on Sunday, which could result in a softening of tough austerity measures if the Socialist candidate Francois Hollande is successful.