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.
German government bonds snapped their biggest advance in almost two weeks amid speculation an auction of 30-year securities will add to evidence demand for fixed-income assets is waning as the economy improves.
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.
German government bonds fell for the first time in three days before euro-area manufacturing and confidence reports this week that economists said will add to signs of recovery, damping demand for safer assets.
Italian 10-year bond yields rose above those of Spain for the first time in 18 months amid speculation a vote on whether to expel Silvio Berlusconi from Italy’s Senate will destabilize the coalition government.