German government bonds rose, with 10-year yields dropping the most in seven weeks, as reports showed U.S. jobless claims increased and euro-area inflation slowed, boosting the prospects of more central-bank stimulus.
Italian bonds advanced, pushing 10- year yields down from the highest level in four weeks, as President Giorgio Napolitano sought to end a political stalemate and start negotiations on a new government.
Europe’s government bonds rose this week, with French, Austrian and Belgian yields falling to records, as the European Central Bank said it would keep policy accommodative and the Bank of Japan boosted asset purchases.
Spain’s government bonds rose for a 10th day and the nation’s borrowing costs fell at a bill sale amid optimism the European Central Bank will limit volatility caused by a political stalemate in Italy.
Italian bonds rose, snapping a decline from yesterday, as European Central Bank executive board member Benoit Coeure said the institution will do everything it can within the terms of its mandate to preserve the euro.
The cost of borrowing dollars between banks for 12 months rose above 1 percent for the first time this year as speculation mounted that the Federal Reserve will tighten monetary policy in the coming year.