Spanish, Italian Bonds Gain as ECB Signals Prolonged Low Rates

Spanish and Italian bonds advanced for a second week after the European Central Bank signaled it will keep interest rates low for longer, boosting demand for higher-yielding euro-area assets.

German two-year notes rose as ECB President Mario Draghi said on July 4 that the central bank planned to keep its interest rates low for an “extended period.” European bonds pared weekly gains after a report showed employment in the U.S. increased more than forecast, stoking speculation the Federal Reserve will scale back stimulus. Portuguese debt slid for a seventh week on concern the resignation of two ministers will derail the attempts to plug budget deficits.