December 12, 2016 / 7:27 AM / 8 months ago

Euro zone bond yields sharply higher on oil price surge

LONDON, Dec 12 (Reuters) - Euro zone government bond yields opened sharply higher on Monday, after the first agreement since 2001 between OPEC and other producers to jointly reduce output caused a surge in oil prices and stoked expectations for higher inflation.

Germany's 10-year Bund yield was up 5 basis points at 0.40 percent, while 30-year bond yields jumped 9 bps to 1.23 percent -- their highest level since January.

Other euro zone bond yields were also about 5 bps higher on the day, while U.S. 10-year Treasury yields rose above 2.5 percent to their highest since October 2014.

Oil prices shot to their highest levels since mid-2015 on Monday after the Organization of the Petroleum Exporting Countries and other producers agreed to jointly reduce output in order to rein in oversupply and prop up markets. (Reporting by Dhara Ranasinghe, editing by Larry King)

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