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By Bloomberg

Spanish bonds declined for a fourth day after a policy maker signaled the European Central Bank would not extend its stimulus program to buying government securities of distressed member states.

Yves Mersch said yesterday in Frankfurt that the ECB's plan to buy asset-backed securities, announced last week, "can neither be equated with a broad-based program of quantitative easing, nor is it an overture for such an opera." Italy sold about 7 billion euros ($9 billion) of debt due between 2017 and 2030, while Greece is inviting holders of Treasury bills to exchange them for three- and five-year notes.

"The initial optimism about the likelihood of QE has faded," said John Stopford, head of fixed-income at Investec Asset Management Ltd. in London. "We've had comments from members of the ECB who have tried to downplay the significance of what was done last week, in a sense that maybe there is not a lot more that they are likely to do in the short term."

Spanish 10-year yields rose three basis points, or 0.03 percentage point, to 2.30 percent at 1:36 p.m. London time. The rate has climbed 25 basis points this week. The 2.75 percent bond due October 2024 fell 0.3, or 3 euros per 1,000-euro face amount, to 104.065.

While yields on Italian and Irish bonds reached record lows last week after the ECB unexpectedly cut borrowing costs and said it would buy asset-backed securities, rates have since risen on concern the plan won't be enough to boost the region's economy. ECB President Mario Draghi pledged on Sept. 4 to "significantly steer" the central bank's balance sheet back toward the 2.7 trillion euros of early 2012 from 2 trillion euros now.

Greece is proposing to sell about 1 billion euros in new bonds through the debt exchange, according to a finance ministry bourse filing. The offer expires at 5 p.m. London time.

Spanish securities returned 13 percent this year through yesterday, Bloomberg World Bond Indexes show. Germany's earned 6.6 percent and Italy's gained 12 percent.