Spanish government securities led declines among the euro-region’s so-called peripheral countries as renewed signs of political instability in the currency bloc damped demand for the nation’s assets. Spain’s 10-year yields climbed to the highest level in seven weeks as Premier Mariano Rajoy was accused of accepting illegal cash payments and strategists from Commerzbank AG recommended investors cut holdings of the country’s debt. Italian and Portuguese securities dropped as analysts at Morgan Stanley and Deutsche Bank AG said this year’s rally in periphery bonds may falter. German bunds advanced. “The market is realizing that there are still substantial risks out there, especially on the political front,” said Michael Leister, a fixed-income strategist at Commerzbank in London. “The dynamics in Spain are devastating because they have the potential to cause a lot of damage. If in the worst case we would get a new election in Spain, this would be a real shocker for the market.” Spain’s 10-year yield jumped 23 basis points, or 0.23 percentage point, to 5.44 percent at 4:30 p.m. London time, the highest level since Dec. 17. The 5.4 percent bond maturing in January 2023 fell 1.78, or 17.80 euros per 1,000-euro ($1,354) face amount, to 99.685. Yields on similar-maturity Italian debt increased 15 basis points to 4.48 percent after reaching 4.89 percent, the most since Dec. 31. Portugal’s 10-year yields climbed 26 basis points to 6.44 percent. Illegal Payments Rajoy’s assurance that the allegations of illegal payments are false failed to contain criticism, with the opposition demanding he step down to restore faith in the political class. “Rajoy should resign to make way for another prime minister who can re-establish the strength, credibility and stability that Spain needs,” opposition leader Alfredo Perez Rubalcaba said during a televised press conference yesterday.