European Bond Yields Post Biggest Weekly Drop in 3 1/2 Years as Risks Rise

(Bloomberg) -- European government bonds rallied,
with 10-year yields posting their biggest weekly drop in 3 1/2
years, as the risk of owning corporate debt rose to a two-year
high and investors switched into the safest assets.

Bund yields slid to a seven-week low on concern defaults on
U.S. home loans to people with poor credit histories will spread
to the wider economy. Government debt around the world rose this
week after Bear Stearns Cos. told investors they weren't likely
to get their money back from two of its hedge funds that bet on
securities backed by subprime mortgages.


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European Government Bonds Little Changed Before Today's Inflation Report

(Bloomberg) -- European government bonds were
little changed before a report today that will probably show
inflation held near the European Central Bank's target last
month, boosting the case for higher interest rates.

The European Union will probably say consumer prices in the
13-nation euro region increased 1.9 percent in June from a year
earlier, the same as in May, according to economists in a
Bloomberg survey. ECB policy makers last week said benchmark
borrowing costs remain supportive of economic growth.


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European Bonds Advance for Second Day ; 10-Year Yield Falls t 4.62 Percent

(Bloomberg) -- European government bonds advanced
for a second day in London.

The yield on the 10-year bund fell 3 basis points to 4.62
percent by 7:05 a.m. in London. The price of the 4.25 percent
bond due July 2017 gained 0.24, or 2.4 euros per 1,000-euro
($1,345) face amount, to 97.08. Bond yields move inversely to
prices.


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European Government Bonds Advance on Concern Hedge Fund Losses May Widen

(Bloomberg) -- European government bonds advanced in
London as concern losses at hedge funds run by Bear Stearns Cos.
may increase attracted investors to the safest assets.

Gains in debt sent 10-year yields down from near a five-year
high as Bear Stearns funds collapsed, stoking concern on
valuations in the collateralized debt obligations market. The
perceived risk of owning European corporate bonds, as measured by
credit default swaps, rose the most in three months today.


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European Government Bonds Gain; German Sentiment Index Unexpectedly Drops

(Bloomberg) -- European government bonds rose after
a report showed investor confidence in Germany, the continent's
biggest economy, unexpectedly fell this month.

Two-year yields fell from near a six-year high after the ZEW
Center for European Economic Research said its index of investor
and analyst expectations dropped to 20.3, from 24 in May.
Economists surveyed by Bloomberg News had expected confidence to
improve, predicting a reading of 29.


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European Bonds Set for Sixth Weekly Drop; ECB Signals Higher Interest Rate

(Bloomberg) -- European government bonds headed for
a sixth weekly drop after central bank officials said interest
rates may need to rise to curb accelerating growth in the $10.4
trillion economy.

The bonds are poised for the longest run of weekly losses
since January, pushing yields on benchmark 10-year debt to the
highest since August 2002. European Central Bank policy maker
Axel Weber said late yesterday that interest-rate policy is
``still far from being restrictive'' on economic growth.


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