The yield difference between U.K. 10- year government bonds and similar-maturity French securities was near the most in almost seven years after central-bank decisions that highlight diverging economic prospects.
The pound advanced to its strongest level in almost 18 months against the euro after the European Central Bank cut its deposit rate below zero for the first time and announced further measures to counter deflation threats.
Germany’s 10-year bonds advanced for the first month since July after a report showed the jobless rate in the euro area climbed to a record in October, indicating the region is struggling to boost growth.
Italian government bonds fell, pushing 10-year yields up from a record low, as investors monitored speeches by European Central Bank policy makers for signs of whether they will introduce new stimulus.
The Standard & Poor’s 500 Index fell, giving the gauge its worst week since January, Treasuries were little changed and gold rose as investors sought haven assets after talks failed to resolve the Ukraine standoff before Sunday’s Crimea referendum.
Italian government bonds rose, pushing 10-year yields below 3 percent for the first time, as services data added to signs of recovery in the euro area that are bolstering demand for higher-yielding assets.
Investors paid little attention to Italy’s political intrigue this month, focusing instead on early signs of economic recovery and the outgoing government’s commitment to budget rigor. That may start to change.