European Government Bonds Advance as Asian Stocks Slide on Subprime Losses

(Bloomberg) -- European government bonds rose for a
second day as Asian stocks slid on concern U.S. subprime mortgage
losses will slow economic growth and drive up global financing
costs.

Gains in bunds pushed benchmark 10-year yields to near the
lowest since May as investors sold riskier assets and sought the
relative safety of government debt. Bear Stearns Cos. ousted Co-
President Warren Spector after credit-market losses and eroding
investor confidence.


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European Government Bonds Post Weekly Decline as ECB Signals Rates to Rise

(Bloomberg) -- European government bonds posted their
first weekly decline in a month after the European Central Bank
indicated it will raise interest rates further this year.

The decline in German bunds, Europe's benchmark, pushed 10-
year yields to the highest in a week yesterday after ECB
President Jean-Claude Trichet signaled rates may rise from a six-
year high of 4 percent as early as September. Fellow policy maker
Lorenzo Bini Smaghi told Italian newspaper Il Sole-24 Ore that
inflation would quicken this year, adding to the case for higher
borrowing costs.


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European Bonds Fall as Rebound in Stocks Eases Appetite for Safest Assets

(Bloomberg) -- European government bonds fell,
pushing 10-year yields up from near a two-month low, as a
recovery in stocks reduced demand for the safest assets.

Bunds reversed gains as the risk of holding corporate debt
dropped from earlier in the day, according to credit default
swaps traded on JPMorgan Chase & Co.'s iTraxx index. ECB Vice
President Lucas Papademos said today he expects economic growth
in the euro region to stay ``robust'' in coming quarters, stoking
speculation interest rates have further to rise.


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European Bonds Rally as Subprime Defaults Prompt Investors to Seek Safety

(Bloomberg) -- European government bonds rallied on
speculation defaults on U.S. subprime mortgages will hurt the
global economy, fueling demand for the safest assets.

Bunds gained, sending 10-year yields to their lowest in
almost three weeks, after the risk of owning European corporate
debt touched a two-year high. Government debt was buoyed this
week after Bear Stearns Cos. told investors they weren't likely
to get any money back from two of its hedge funds that bet on
securities backed by subprime mortgages.


Read more at Bloomberg Bonds News