June 17, 2019 / 2:05 PM / a month ago

France drives pick up in European government bond activity in Q1 - AFME

LONDON, June 17 (Reuters) - Trading activity in European government bond markets rebounded in the first quarter of this year, driven by increased trading from France and Ireland, the Association for Financial Markets in Europe (AFME) said on Monday.

Concerns about weakening economic growth, a shift in monetary policy stance by major central banks and trade war fears have boosted demand for sovereign bonds this year.

Average daily trading volumes of European government bonds jumped by 15% year-on-year in the first quarter, driven by a substantial increase in trading in France, where trading volumes surged 52% year-on-year, trade association AFME said in a report.

Irish trading volumes rose 39% in the first quarter.

In contrast, average daily trading volumes in the Italian bond market declined 27% in the first quarter versus 2018 levels, while those in euro zone benchmark issuer Germany fell 15% in.

AFME noted a sizeable rise in turnover in the British government bond market.

It said that since 2006, turnover of UK government bonds or Gilts has almost tripled. A large sustained increase in trading was recorded after the 2016 Brexit referendum, AFME said.

It added that the growth in outstanding government bonds appeared to be driving a large part of the increase in turnover in British and French bond markets. (Reporting by Dhara Ranasinghe Editing by Tommy Wilkes)

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