Italian Bonds Climb With Spanish Peers as European Stocks Rally

  • Greek 10-year bond yield falls to lowest since January
  • Italy-Germany yield gap narrows from widest in two months

Italy’s government bonds advanced along with their Spanish peers as a rally in European stocks helped boost demand for the euro region’s higher-yielding debt.

Greece’s 10-year bond yield fell to the lowest in four months as Prime Minister Alexis Tsipras’s government passed a set of pension and income-tax reforms, paving the way for the nation to unlock another disbursement of emergency loans. European shares headed for their biggest gain in three weeks.

“It’s a combination of risk-on” and a retracement of some of the “selloff last week in periphery,” said Jens Peter Soerensen, chief analyst at Danske Bank A/S in Copenhagen. “It’s positive that the Greek parliament is playing ball” it remains to be seen if the nation will be granted a new round of loans, he said.

Italy’s 10-year bond yield fell three basis points, or 0.03 percentage point, to 1.47 percent as of 2:22 p.m. in London. The 2 percent bond due December 2025 rose 0.265, or 2.65 euros per 1,000-euro ($1,139) face amount, to 104.805

Benchmark German 10-year bund yields were little changed at 0.14 percent, leaving the yield spread between them and Italian securities at 1.33 percentage points, from 1.37 percentage points reached May 6, which was the widest since Feb. 26.

Similar-maturity Spanish bond yields declined two basis points to 1.57 percent, while those on Greek 10-year debt fell to 8.25 percent, the lowest since Jan. 5.

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