(Updates prices, adds Greece)
By Abhinav Ramnarayan
LONDON, Sept 7 Euro zone bond yields fell on
Wednesday on bets that weak data from the United States has put
pressure on the European Central Bank to announce further policy
The ECB meets on Thursday. On Tuesday, data showed that the
U.S. service sector expanded more slowly in August than in July,
with the fall the largest since the 2008 financial crisis.
This, on the back of Friday's weak jobs numbers, pushed back
expectations for a U.S. rate hike.
"With a September rate hike looking less likely to happen,
the ECB might be more pressured to come up with a decision this
week on further measures," said Benjamin Schroeder, senior rates
strategist at ING.
The ECB is expected to leave rates unchanged when its
governing council meets but could use the opportunity to extend
its bond-buying scheme and tweak the parameters to ease supply
Euro zone bond yields edged lower, with the yield on the
10-year German Bund dipping 1 basis point to minus
The fall came even as the German debt management office sold
3.5 billion euros of new 10-year Bunds with a yield of minus
0.11 percent, a record low at auction.
Germany's longer-dated bonds proved even more popular on the
day, with 30-year Bund yields briefly falling as
much as 5 bps to just below 0.4 percent.
Spanish bond yields edged lower, extending Tuesday's fall
when the 10-year bond recorded its biggest daily
tumble since the start of July.
That fall came despite the fact that political deadlock in
the country looks likely to drag on after acting prime minister
Mariano Rajoy last week failed to win parliamentary approval for
the formation of a government.
"You had a spike in yields in the run-up to last week's
vote, and I think with the ECB expected to announce measures
this week, Spain is just one of the better yielding bonds in the
euro zone," Schroeder said.
Greece meanwhile may sell one or two small bonds if it is
included in the ECB's quantitative easing programme, senior
officials with knowledge of the matter told Reuters.
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/?spageId=livemarkets
(Reporting by Abhinav Ramnarayan; Editing by Raissa Kasolowsky
and John Stonestreet)