German government bonds advanced, with two-year yields falling to the lowest in a week, after the European Central Bank was said to weigh a negative deposit rate to bolster growth and prevent deflation.
Germany’s 10-year government bonds rose, with yields falling from near a three-week high, as data showed European industrial production slid in September more than analysts predicted, spurring bets on more stimulus.
Spain’s government bonds declined for a third day before the nation sells as much as 4 billion euros ($5.41 billion) of securities tomorrow, when European Central Bank policy makers meet to set interest rates.
The pound jumped more than 1 percent against the euro, the biggest gain in six months, after euro- area inflation slowed and the jobless rate climbed to a record, boosting demand for alternatives to Europe’s shared currency.
Italy’s government bonds fell for a third week as reports showed the nation’s business confidence worsened and euro-area services and manufacturing grew less than economists forecast, sapping demand for higher-yielding assets.
Germany’s government bonds fell, pushing 10-year yields to the highest level in three weeks, as speculation that U.S. lawmakers will reach agreement on raising the nation’s debt limit damped demand for the safest assets.
Spanish bonds rose, pushing 10-year yields to a two-week low, before data that economists said will show U.S. employers added jobs last month and euro-area confidence improved, boosting demand for higher-yielding assets.
Spanish government bonds led gains in European securities as a report showing U.S. payrolls climbed last month less than economists predicted fueled speculation that the Federal Reserve will maintain monetary stimulus.
Germany’s 10-year government bonds fell for a second week as speculation U.S. lawmakers would reach an agreement on raising the nation’s debt limit boosted stocks and curbed demand for the safest fixed-income assets.
Italian government bonds rose this week, with two-year yields reaching a two-month low, on optimism the nation’s political situation has stabilized after Prime Minister Enrico Letta won a confidence vote in parliament.