European Bonds Rally, Pushing Benchmark Yield to Its Lowest in Two Months

(Bloomberg) -- European government bonds rallied,
pushing 10-year yields to the lowest in more than two months, as
stocks slumped and the risk of holding corporate debt soared.

Benchmark bunds rose for a third day on rising concern about
loan defaults and as investors balked at funding takeovers.
Traders also scaled back bets that the European Central Bank will
push interest rates higher as a report showed business confidence
in Germany weakened for a second month.


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European Government Bonds Post Weekly Gain on Subprime Mortgage Concerns

(Bloomberg) -- European government bonds posted
their biggest weekly gain in more than four months after concern
about the U.S. subprime mortgage sector crimped demand for
riskier assets.

Government debt advanced after Moody's Investors Service
lowered ratings on $5.2 billion of bonds backed by U.S. subprime
mortgages and Standard & Poor's said it may cut credit ratings on
$7.4 billion of similar debt. Bunds extended their rally
yesterday after a U.S. report showed retail sales fell more than
expected last month, stoking concern about an economic slowdown.


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European Government Bonds May Fall Before German Factory Production Report

(Bloomberg) -- European government bonds may fall
before a report economists forecast will show German industrial
production rebounded in May, reinforcing speculation the European
Central Bank will keep raising interest rates to curb growth.

Government debt fell last week, sending yields near to near
a five-year high, after President Jean-Claude Trichet signaled
borrowing costs will rise further, and a report showed
manufacturing orders in Europe's largest economy gained more than
expected. Investors added to bets the ECB will lift its key rate
a half percentage point to 4.5 percent by the year-end.


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European Government Bonds Post Weekly Decline on Outlook for ECB Rates

(Bloomberg) -- European government bonds fell this
week, extending the worst quarterly slide in almost eight years,
after European Central Bank President Jean-Claude Trichet
signaled policy makers may need to lift interest rates further by
year-end.

Benchmark debt dropped today, sending 10-year bund yields to
near a five-year high, after a report showed manufacturing orders
in Germany rose more than expected in May. Bonds fell yesterday
after Trichet said inflation in the region needs ``careful
monitoring,'' as the ECB kept its key rate at 4 percent.


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European Government Bonds May Decline on View ECB Will Signal Higher Rates

(Bloomberg) -- European government bonds may fall on
speculation European Central Bank President Jean-Claude Trichet
will signal further interest-rate increases after policy makers
conclude their monthly meeting.

While all 42 economists surveyed by Bloomberg News forecast
the Frankfurt-based ECB will hold borrowing costs at 4 percent
today, futures trading shows investors are raising bets the key
rate will reach 4.5 percent by year-end. Yields on Europe's
benchmark bund have risen 10 basis points this week.


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European Government Bonds May Decline Before Consumer Confidence Report

(Bloomberg) -- European government bonds may drop
before a report that's expected to show German consumer
confidence rose, adding to expectations the European Central Bank
will keep raising interest rates.

Benchmark 10-year bund yields held near the highest in
almost five year last week after surveys showed euro-region
manufacturing grew at an unexpectedly rapid pace in June and
Belgian business confidence rose more than forecast. GfK AG's
confidence index for July probably climbed to 7.8 from 7.3 in
June, according to economists surveyed by Bloomberg News.


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European Government Bonds Gain; 10-Year Bund Yield Falls to 4.61 Percent

(Bloomberg) -- European government bonds advanced
in London, reversing earlier declines.

The yield on the 10-year bund fell 3 basis points to 4.61
percent by 1:38 p.m. in London. The price of the 4.25 percent
bond due July 2017 gained 0.21, or 2.1 euros per 1,000-euro
($1,343) face amount, to 97.13. Bond yields move inversely to
prices.


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European Government Bonds Drop on Concern Global Inflation Is Quickening

(Bloomberg) -- European government bonds fell for a
second day as central banks in the U.K. and Sweden indicated they
will raise interest rates further, adding to concern global
inflation is quickening.

Debt's slide sent 10-year yields to near a five-year high as
investors reassess the outlook for global borrowing costs.
Interest-rate futures suggest the European Central Bank will keep
raising lending rates this year, while Sweden's Riksbank said
yesterday it'll lift rates twice more and minutes of the Bank of
England's last rate-setting meeting showed more policy makers
backed higher borrowing costs than forecast.


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European Bonds Advance as Producer Price Inflation Slows in Germany

(Bloomberg) -- European government bonds gained for
a second day after a report showed producer-price inflation in
Germany, Europe's biggest economy, held near the lowest in almost
three years in May.

Benchmark debt was also buoyed by a rally in Treasuries
after reports this week showed U.S. house construction declined
for the first time in four months, and confidence among
homebuilders dropped to the lowest since 1991. Ten-year bunds had
their biggest gain in almost two months yesterday as a report
showed German investor sentiment unexpectedly worsened.


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European Bonds Advance as Yields Near Five-Year High Attract Investors

(Bloomberg) -- European government bonds advanced
for a second day as 10-year yields near the highest in five years
attracted investors.

Benchmark debt was also buoyed by a report today showing
German producer-price inflation held near the lowest in almost
three years in May. Ten-year bunds had their biggest gain in
almost two months yesterday after a report showed investor
confidence in Europe's biggest economy unexpectedly fell.


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European Bonds May Decline on Speculation Investor Confidence to Increase

(Bloomberg) -- European government bonds may fall
on speculation accelerating growth in the $10.4 trillion euro
region economy will prompt central bank officials to raising
interest rates.

European debt had the longest run of weekly losses since
January last week, with benchmark 10-year yields touching the
highest since August 2002. Bonds may extend losses before the
release of a report tomorrow expected to show German investor
confidence on the economy rose to the highest in a year.


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