July 31, 2018 / 6:20 AM / a year ago

German, French yields drop after Japan vows to keep rates low

LONDON, July 31 (Reuters) - German and French government bond yields dropped on Tuesday after the Bank of Japan vowed to keep interest rates low, a move that means Japanese investors are likely to continue investing in the euro zone bond market.

The Bank of Japan took measures to make its massive stimulus programme more flexible but pledged to keep interest rates low for the time being on Tuesday, reflecting its forecast that it would take time for inflation to hit its 2 percent target.

The yield on French 10-year government bonds — a market favoured by Japanese investors — dropped 4 basis points to 0.71 percent in early trade while the German equivalent fell 3 bps at 0.415 percent. (Reporting by Abhinav Ramnarayan)

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