Euro-Area Bonds Drop as Confidence Gauge Damps Demand for Safety

Euro-area government bonds fell as a report showed business confidence in Germany, the region’s largest economy, unexpectedly increased in September, damping the case for an extension of central-bank stimulus.

Spain’s 10-year securities fell for a second day, pushing yields up from near a one-month low. The Ifo institute’s business climate index climbed to 108.5 from a revised 108.4 in August. The median estimate in a Bloomberg survey of economists was for a decline to 107.9.

The yield on Spanish 10-year bonds rose two basis points, or 0.02 percentage point, to 1.99 percent at 9:43 a.m. London time. It touched 1.93 percent on Wednesday, the lowest since Aug. 18. The 2.15 percent security fell 0.22, or 2.20 euros per 1,000-euro ($1,120) face amount, to 101.435.

German 10-year bund yields increased one basis point to 0.61 percent. The yield fell to 0.58 percent a day earlier, the least since Aug. 25.

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