Bloomberg News

German Bunds Snap Three-Day Drop as Optimism Over Greece Wanes

January 24, 2012

Jan. 24 (Bloomberg) -- German 10-year bunds snapped a three-day decline as European finance ministers and Greek bondholders reached a stalemate over a debt-swap deal, threatening to prolong the region’s crisis.

Benchmark German yields dropped from a one-month high as Luxembourg’s Prime Minister Jean-Claude Juncker told reporters today the Greek plan was “off track” and called on creditors to drop demands that new bonds carry coupons averaging 4 percent. The Netherlands plans to sell debt due in 2013 and 2042 today, while Spain is set to auction bills. Economists say a euro-area report today will show a contraction in services and manufacturing output slowed in January.

The German 10-year yield was little changed at 1.96 percent at 7:46 a.m. London time after rising to 2 percent yesterday, the highest since Dec. 21. The 2 percent bund due in January 2022 traded at 100.385.

A euro-area composite index based on a survey of purchasing managers in the services and manufacturing industries rose to 48.5 from 48.3 in December, according to a Bloomberg News survey. A reading below 50 indicates contraction.

Bunds have handed investors a 0.9 percent loss this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. French government bonds have slipped 0.1 percent and Greek debt lost 0.2 percent, the indexes show.

--Editors: Nicholas Reynolds

To contact the reporters on this story: Lucy Meakin in London at lmeakin1@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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