Feb. 13 (Bloomberg) -- Government bonds will rise for the next six months in the world's biggest debt markets as the U.S. economic slowdown spreads to Europe and Asia, a survey of Bloomberg users showed.

Bonds will rally in the U.S., Germany, U.K., Italy, France, Japan and Hong Kong, according to the monthly Bloomberg Professional Global Confidence Index, which canvassed more than 6,800 users from New York to Paris to Tokyo. Swiss bonds are the only debt whose yields may increase, the index indicated.

Government securities returned 2.11 percent this year as investors sought a haven from declining stock markets and losses on securities tied to subprime mortgages, according to Merrill Lynch & Co. index data. Officials from the Group of Seven industrialized nations said in a statement Feb. 9 that turmoil in financial markets may force the countries' central banks to lower interest rates to shore up the global economy.

Financial markets are forecasting ``a moderate easing cycle,'' said Jack Malvey, the chief global fixed-income strategist at Lehman Brothers Holdings Inc. in New York, who participated in the survey. ``It's certainly not over by the middle of the year.''

Bloomberg users in Germany and Italy became less confident about the economy, saying yields will decline, after predicting in January that they would climb. The index of expectations for users in Germany fell to 43.99 from 56.82, while in Italy it declined to 45.88 from 50.74. The measure is a diffusion index, meaning a reading below 50 indicates benchmark 10-year yields will drop.

Swiss Inflation

Readings in the U.S., U.K., France, Japan and Hong Kong remained below 50 for a second consecutive month. The yield on the 10-year note has dropped 35 basis points, or 0.35 percentage point, to 3.68 percent this year, according to Bloomberg data.

The International Monetary Fund cut its forecast for 2008 global growth to 4.1 percent on Jan. 29, the weakest since 2003. That's down from 4.9 percent in 2007 and below the 4.4 percent pace projected in October.

Bloomberg users in Switzerland said they expect yields to rise for a fourth consecutive month. Swiss inflation accelerated at a 2.4 percent annualized rate in January, the fastest since December 1993, the Federal Statistics Office said Feb. 8. It was the first time in 12 years that inflation exceeded the central bank's 2 percent threshold for price stability, limiting policy makers' scope to lower rates.

Franc, Yen

Users surveyed remained optimistic on the Swiss franc, saying for the fourth straight month that the currency would strengthen. The index was 60.15 on the franc in February, compared with 61.76 last month.

The franc gained 2.9 percent against the U.S. dollar this year as slowing economies prompted investors to pare holdings of higher-yielding currencies funded by loans from Switzerland.

British users expect the pound to fall against the dollar, while Italian customers are most pessimistic about the euro, registering 42 in the survey against the dollar. The reading of 46.9 in the U.S. shows users expect the dollar to fall against major currencies. Subscribers in France, Germany, Switzerland and Hong Kong forecast gains for the euro and the franc.

The Japanese yen gained 4 percent against the dollar this year, the biggest rally among the 16 most widely traded currencies as measured by Bloomberg. Like the franc, the yen benefited from the unwinding of the so-called carry trade. The dollar is little changed against the euro and is up 1.2 percent against the British pound.

Bank of Japan Governor Toshihiko Fukui said Feb. 8 that the central bank will use monetary policy to help the economy weather shocks at home or abroad.

``It's become clear the markets are rewarding currencies where central banks are following pro-growth policies,'' said Paresh Upadhyaya, who helps manage $29 billion in currency assets as a senior vice president at Putnam Investments in Boston. He didn't participate in the survey.

To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net

Last Updated: February 13, 2008 07:02 EST