Paris: European government bonds posted a weekly decline amid speculation governments will struggle to find buyers for record issuances as inflation accelerates and central banks withdraw emergency support measures.

Losses pushed the German 10-year yield to the highest in a month Friday as a report showed producer-price inflation was stronger than economists predicted.

The Federal Reserve increased its discount rate by a quarter point on Thursday. Belgium, Italy, the Netherlands and Portugal are scheduled to sell securities this week, and Greece may also announce a debt auction after announcing its intention to do so last month.

"Supply is a big factor for markets," said Jesper Fischer-Nielsen, a senior fixed-income strategist in Copenhagen at Danske Bank, Scandinavia's biggest lender. "There's nervousness from the fact that the Fed is scaling back."

The yield on the bund, Europe's benchmark security, rose 10 basis points last week to 3.29 per cent in London on Friday, the highest since January 19. The French 10-year yield increased 8 basis points to 3.57 per cent.

Business climate index

German bonds may extend losses on speculation that the Ifo institute in Munich will say its business climate index climbed in February.

The Federal Statistics Office in Wiesbaden said Fridfay that producer prices in Europe's largest economy increased by 0.8 per cent in January, compared with a 0.3 per cent forecast in a Bloomberg survey.

Greek notes slumped amid concern the country may not deliver measures to cut its budget deficit as the European Union promised assistance without specifying what form it would take.

"Greece is being attacked by operators," leading to high volatility, French Finance Minister Christine Lagarde said.

Greece will probably sell 10-year bonds in February through banks, Spyros Papanicolaou, the former head of the country's debt agency, said on January 26.

The yield on the two-year Greek note rose 45 basis points to 5.56 per cent. The 10-year yield rose 32 basis points to 6.46 per cent.