German yields dip as weak China data trigger growth concern

Mon Mar 10, 2014 5:04am EDT

Related Topics

* Weak China data push German yields lower

* Italian, Spanish yields stabilise near 2005 lows

By Emelia Sithole-Matarise

LONDON, March 10 (Reuters) - German bond yields fell on Monday after weak Chinese economic data triggered concerns about slowing growth in the world's second-biggest economy.

China's exports unexpectedly tumbled in February, data showed at the weekend, tipping the country's trade balance into deficit and souring investor appetite for equities.

Low-risk German Bunds pushed higher, with lingering concern about the situation in Ukraine also helping them make up more ground following last week's sharp sell-off after the European Central Bank showed it was in no hurry to ease policy further.

German yields dipped 1 basis point to 1.64 percent. Other top-rated euro zone bond yields also slipped.

"The disappointing Chinese data caught markets on the hop ... so Asian equities are on the back foot, pushing down equities in Europe and that's giving Bunds a bit of a lift," said RIA Capital Markets strategist Nick Stamenkovic.

"We think it's going to be a struggle for 10-year Bund yields to get below 1.60 percent given the upward surprise in U.S. non-farm payrolls on Friday."

Elsewhere on the market, Italian and Spanish yields held near last week's lows - the lowest since 2005 - as increased confidence in the currency bloc's recovery spurred investors' search for higher returns.

Italian industrial production rebounded more than expected in January, maintaining the upbeat data outlook.

"The periphery is trading fine. It's very hard to fight it. We still think that we could still see 3 percent as a viable target for Spanish and Italian (10-year yields)," a trader said.

Italian 10-year yields were unchanged on the day at 3.43 percent, while Spanish yields were flat at 3.37 percent.

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