LONDON Jan 3 German government bond yields
nudged up from two-month lows on Tuesday as investors, returning
to their desks after holidays across the globe, waited for data
expected to show sharply rising consumer prices in the euro
zone's largest economy.
Economists polled by Reuters anticipate preliminary
soundings due at 1300GMT to show consumer prices growth at an
annualised 1.3 percent in December, up from 0.7 percent in
Data from the bloc's second biggest economy France showed
inflation hitting its highest since rate since May 2014 in
The likely underlying driver is a rebound in energy prices,
but with inflation also expected to be bolstered in 2017 by the
policies of U.S. President-elect Donald Trump and signs of
faster economic growth in China, the direction of travel is
Long-term inflation expectations in the euro zone, measured
by the five-year, five-year forward rate, are near
their highest levels in more than a year and close to the ECB's
near 2 percent target, as the central bank prepares to pare back
the pace of its money-printing scheme.
"Without any doubt, the highlight of today's data calendar
is going to be the release of the German inflation rate," said
DZ Bank strategist Birgit Figge.
"Until just a few weeks ago, the general consensus was that
upside inflation risks were very limited however... the
inflation rate scheduled to be published today is likely to
reveal a significant uplift."
DZ Bank expects annualised German inflation of 1.4 percent
in December. Euro-wide numbers will be published on Wednesday
with economists expecting prices to have grown 1 percent
German 10-year bond yields rose slightly on Tuesday to 0.20
percent, having hit a two-month low of 0.16
percent on Monday.
Most other euro zone equivalents were slightly higher on the
A private business survey showed China's factory activity
picked up more than expected in December as demand accelerated,
with output reaching a near six-year high.
That came on the heels of data showing manufacturers in
Europe ramped up activity at the fastest pace in more than five
years in December.
In signs elsewhere of the buoyant growth and inflation
outlook, Europe's blue-chip stock index added another 0.6
percent on Tuesday <.STOXX >, having hit a one-year high on
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(editing by John Stonestreet)