French, Austrian and Belgian bonds rose, pushing 10-year yields to record lows, amid speculation the European Central Bank will keep monetary policy accommodative, boosting demand for alternatives to German bunds.
Confidence in U.K. credit is declining the most in the global sovereign-debt market on concern the economy will fall into its third recession in five years and force the government to increase borrowing.
Germany’s bonds rose, pushing 10- year yields to the lowest in eight weeks, as euro-area reports showing unemployment climbed to a record and manufacturing shrank boosted demand for the region’s safest securities.
German two-year note yields climbed to the highest in 10 months as banks’ plans to repay European Central Bank loans added to signs the debt crisis is abating and damped demand for the region’s safest fixed-income assets.
Investors were so concerned about protecting their money from the European debt crisis last month they paid to hold Dutch government notes. An election this week is now raising questions about that status as a shelter.
U.S. stocks rose, sending the Standard & Poor’s 500 Index to its first eight-day rally since 2004, as companies from Microsoft Corp. to Procter & Gamble Co. posted better-than-estimated earnings. The euro strengthened to an 11-month high while the yen traded at the lowest since 2010.
Germany’s two-year notes rose for a second day after the European Central Bank said financial institutions planned fewer repayments of three-year loans next week, curbing optimism that the debt crisis is abating.
Prime Minister Silvio Berlusconi ’s longest-term bonds yield almost as much as Spain’s even though Italy’s deficit is less than half, a sign Europe’s debt crisis has created relative bargains for fixed-income investors.
Government bond sales in the euro region will increase by 1 billion euros ($1.27 billion) to a gross 990 billion euros in 2011 as increased redemptions outweigh improved government finances, ING Groep NV said.