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German Bunds Drop as Portuguese, Irish Debt Securities Rebound

German government bonds fell for the first day in four as Portuguese and Irish debt yields retreated from record highs relative to bunds amid renewed appetite for securities from the euro area’s periphery.

The declines pared a weekly advance after concern flared this week that political opposition and a slower economic recovery may dent efforts to rein in the region’s biggest budget deficits, stoking demand for the safest fixed-income assets. The Spanish-German yield spread also narrowed after the nation said it will raise taxes on the highest earners and cut spending.