German Bunds Decline as Merkel Pledges Support to Euro Region

German government bonds dropped, pushing the 10-year yield up by the most in more than six weeks, as Chancellor Angela Merkel said she is prepared to do whatever is necessary to protect the euro.

Portuguese bonds gained for a third day as borrowing costs fell and demand increased at a sale of 10-year debt today. Merkel was responding to remarks by European Union Economic and Monetary Affairs Commissioner Olli Rehn in which he called for a “comprehensive” plan to contain the sovereign debt crisis. European governments are considering aid for Portugal, debt buybacks, and lower interest rates on rescue loans as part of a package to quell the financial crisis, according to two people with direct knowledge of the talks.