Bloomberg News

German Bunds Drop as GDP Beats Estimates, China Pledges Euro Aid

February 15, 2012

Feb. 15 (Bloomberg) -- German bunds fell as reports showed the nation’s gross domestic product fell less than analysts estimated last quarter and France’s economy unexpectedly expanded, reducing demand for the safest fixed-income assets.

Bunds declined for the second time in three days after the People’s Bank of China said the nation will participate in resolving Europe’s debt crisis, even as European officials put pressure on Greece to deliver additional budget cuts. Portugal is scheduled to auction as much as 3 billion euros ($4 billion) of 91-, 182- and 371-day bills today.

The German 10-year bund yield rose one basis point, or 0.01 percentage point, to 1.92 percent at 8:01 a.m. London time. The 2 percent bond due in January 2022 fell 0.115, or 1.15 euro cents per 1,000-euro face amount, to 100.755.

German GDP, adjusted for seasonal effects, fell 0.2 percent from the third quarter, the Federal Statistics Office said today. Economists had forecast a 0.3 percent decline, according to the median estimate in a Bloomberg News survey. France’s economy expanded 0.2 percent, versus economist estimates for a 0.2 percent drop.

European finance ministers canceled a meeting slated for today and will hold a conference call instead to push Greece on austerity measures. The indebted nation needs a new financial aid package in order before 14.5 billion euros of bonds mature on March 20.

German bunds have handed investors a 0.4 percent loss in 2012, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Greek bonds lost 0.5 percent in the period and Italian bonds made a profit of 8.7 percent, the indexes show.

--Editors: Paul Dobson, Nicholas Reynolds

To contact the reporter 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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