European government bonds rose, led by the securities of higher-yielding nations such as Italy and Spain, amid speculation the Federal Reserve and other central banks will maintain stimulus to keep borrowing costs low.
German government bonds dropped for a third week as European Central Bank President Mario Draghi said the region’s economy should return to growth later this year, damping demand for fixed-income assets.
Italian bonds advanced, with 10-year yields dropping from a six-week high, after the nation met its target amount at a debt auction, signaling demand for the securities picked up following losses this month.
Italian 10-year bonds rose for a fifth week, with yields dropping to the lowest in more than seven years, after the European Central Bank cut interest rates and pledged further stimulus to support growth.
Italian short-dated bond futures may offer investors better protection against price swings in Irish and Portuguese debt than contracts tied to longer-maturity securities or German notes, according to UniCredit SpA.