German bund yield near three-month high

London: German 10-year government bonds stayed near the lowest level in more than three months on signs Europe is recovering from the recession.

The yield on the bund, Europe's benchmark government security, reached its highest level since September 22 as reports showed German unemployment fell for a sixth month in December and exports expanded in November more than forecast. Germany and France auctioned a combined 13.6 billion euros (Dh72 billion) of bonds. The bund yield rose 23 basis points last month, the most since May.

"The sell-off that we had in December hasn't been negated," said Padhraic Garvey, head of investment-grade debt strategy at ING Groep NV in Amsterdam. "Generally the data has been upbeat, but the auctions have been taken down reasonably well."

The yield on the 10-year bund was little changed in the week at 3.38 per cent in London on Friday, after reaching 3.43 per cent on January 4. The yield on the two-year note fell 9 basis points to 1.24 per cent.

European bonds slid last month as rising stocks and the prospect of increasing supply dulled the allure of fixed income. Governments are offering record amounts of debt after funding stimulus measures to help end the worst recession since the Second World War.