German Note Yields Fall to Record After Talks; Greek Bonds Drop

German two-year notes rose, pushing yield to a record low, after a meeting between Chancellor Angela Merkel and French President Nicolas Sarkozy failed to ease concern the region’s debt crisis will spread.

Germany auctioned 3.9 billion euros ($4.98 billion) of six-month bills at a negative yield for the first time as investors sought out the safest assets. Ten-year bunds erased losses after a report showed industrial output in Europe’s largest economy declined, adding to signs growth may have stalled. Greek two-year yields climbed to a record amid concern the nation’s writedown deal with private-sector creditors will fail.