| LONDON, Sept 14
LONDON, Sept 14 Euro zone bond yields rose
across the board on Wednesday after a top European Central Bank
official said the central bank should hold off on new monetary
Most yields touched their highest levels since Britain's
vote to leave the EU in late June, extending a rise that started
after the ECB's policy meeting last week, when it disappointed
investors by introducing no new easing measures.
Speaking in Strasbourg late on Tuesday, ECB Executive Board
member Sabine Lautenschlaeger voiced clear opposition to bigger
and longer asset purchases by the central bank, adding that more
stimulus risked becoming ineffective and could magnify negative
Even though Lautenschlaeger has opposed many of the bank's
past stimulus plans, her hawkish tone appeared to unsettle some
investors, who had started to question whether monetary easing
globally was petering out.
The Nikkei newspaper reported that the Bank of Japan, which
meets next week, plans to make negative interest rates the
centrepiece of future easing as expansions to asset buying near
And even though money markets are pricing in just a 15
percent chance that the U.S. Federal Reserve will raise interest
rates at its meeting next week, some investors are worried that
it might telegraph future tightening.
"Markets have continued to be spooked by the potential for
central banks to scale back the level of monetary support on
almost a global basis," Peter Chatwell, head of euro rates
strategy at Mizuho said.
"Lautenschlaeger's comments did little to ease fear of
withdrawal of central bank's support."
German 10-year bond yields -- the bloc's benchmark -- rose 2
basis points to 0.05 percent on Wednesday, having
climbed as high as 0.09 percent in early trades, their highest
since the results of Britain's EU vote was announced on June 24.
The rise was even more pronounced in the 30-year sector,
with yields up 3 bps at 0.66 percent before a sale
of 1 billion euros of 30-year debt at auction due on Wednesday
Of the other euro zone bonds, Italian 10-year yields were up
3 bps at 1.31 percent. The Portuguese equivalents
were up 8 bps at 3.36 percent , both at their
highest since the Brexit result.
With focus firmly on the ECB, analysts said, a speech by
Austria Central Bank Governor Ewald Nowotny and his Dutch
counterpart Klaas Knot in Vienna, scheduled for 0900 GMT, would
be closely scrutinised by investors.
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 Larry King)