Italian government bonds declined for the first time in four days as a rally propelled by European Central Bank stimulus that drove yields on the securities to a record low showed signs of losing momentum.
Spanish bonds fell for a second day as the government said it plans to sell inflation-linked securities for the first time, fueling concern increased supply will threaten a rally that pushed yields to record lows.
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.
The euro area’s higher-yielding government bonds are emerging as a haven from emerging-market turmoil as the prospect of greater stimulus from the European Central Bank underpins demand for the securities.
Italian banks dropped in Milan, leading declines in the European Stoxx 600 Banks Index, as the country’s 10-year bond yields rose to the highest in a month on concerns voters in the European Parliamentary elections may turn against Prime Minister Matteo Renzi.