June 24, 2020 / 11:17 AM / 12 days ago

UPDATE 2-Austria's century bond steals show from German morale rise

* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Adds detail on Austria and updates prices)

By Yoruk Bahceli

AMSTERDAM, June 24 (Reuters) - Euro zone bond yields were steady on Wednesday, as investors focused on a new 100-year bond from Austria, with a record bounce-back in German business sentiment having little impact.

Austria raised 2 billion euros ($2.26 billion) in one of the longest-dated bond sales since the coronavirus crisis, which analysts said showed demand for yield and longer-dated assets.

Demand for the Austrian bond was nearly nine times the amount being sold, one lead manager said.

Meanwhile in Germany, business morale recorded its strongest rise ever in June and the euro zone’s largest economy should return to growth in the third quarter, the Ifo institute said. .

But the data had little market impact, with Germany’s 10-year bond yield down 2.8 basis points at -0.43% after briefly hitting its highest in nearly two weeks at -0.39%.

Italian 10-year yields were flat at 1.34%

“It’s clearly after yesterday’s PMIs that the bar for an additional surprise was extremely high,” said Michael Leister, head of interest rate strategy at Commerzbank in Frankfurt.

Business activity indexes on Tuesday supported hopes for a V-shaped recovery and boosted risk appetite, leading safe-haven yields such as Germany’s to rise.

Germany, meanwhile, sold 2.127 billion euros in the first reopening of its 15-year bond via auction. ($1 = 0.8841 euros) (Reporting by Yoruk Bahceli; Editing by Alex Richardson, Jane Merriman and Alexander Smith)

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