February 2, 2018 / 1:47 PM / 6 months ago

European bond yields spike as data shows strong U.S. wage growth

LONDON, Feb 2 (Reuters) - Euro zone bond yields extended their rise on Friday after U.S. payroll data showed that annual wage growth in the world’s biggest economy was the strongest since 2009.

U.S. job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment.

Germany’s 10-year government bond yield hit a fresh high of 0.76 percent after the release of the data, and was up 5 basis points on the day.

Meanwhile, 10-year U.S. Treasury yields rose to 2.84 percent, its highest since early 2014.

British 10-year government bond yields rose to their highest level since May 2016 after the data, peaking at 1.609 percent, 7 basis points up on the day as March gilt futures extended losses.

The dollar extended gains to rise more than half a pecent against a basket of rivals at 89.11. Sterling and the Canadian dollar was among the hardest hit with both currencies down 0.7 percent against the greenback. (Reporting by Fanny Potkin, David Milliken and Saikat Chatterjee; Editing by Abhinav Ramnarayan)

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