European Bonds Rise as Economy Reinforces Wagers on Loose Policy

Euro-area government bonds rose as signs the economic recovery is slowing fueled speculation major central banks will persist with their expansionary policies.

Yields tumbled from Germany to Portugal after Markit Economics Ltd. said its composite index of euro-zone services and manufacturing fell to 53.4 in May, missing the forecast of economists in a Bloomberg survey who predicted no change from last month’s 53.9 level. On Wednesday, minutes of the Federal Reserve’s last meeting signaled that officials probably won’t raise interest rates in June. Spanish bonds jumped even as the country prepared to sell as much as 5.5 billion euros ($6.1 billion) of securities, while France is also auctioning debt.

Germany’s 10-year bund yield fell two basis points, or 0.02 percentage point, to 0.61 percent as of 9:40 a.m. London time, having touched 0.55 percent on May 19, the lowest in more than a week. The 0.5 percent security due in February 2025 rose 0.210, or 2.10 euros per 1,000-euro face amount, to 98.97.

Portugal’s 10-year yield dropped three basis points to 2.39 percent and the yield on similar-maturity Spanish debt declined four basis points to 1.77 percent.

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