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Bond Markets

Yields dip as equities fall

LONDON: European government bond yields fell on Monday as losses in the continent's stock markets spurred modest safe-haven buying, analysts said.

Activity was muted by a lack of economic data and the closure of U.S. markets in observance of the President's Day holiday.

"European stocks opened off and therefore (bond prices) opened up a few ticks higher and basically have pretty much stayed that way, at least as far as the long end is concerned," said Steve Barrow, strategist with Bear Stearns International.

At 1627 GMT the benchmark 10-year Bund yield fell 3.4 basis points to 5.515 percent. The 10-year British gilt yield was down 8.6 basis points at 5.522 percent.

Analysts said safe-haven flows into bonds were helping euro debt as major stock markets in Europe mirrored losses in U.S. and Asian equity markets.

Among leading European blue-chip bourse indices, London's FTSE 100 .FTSE was down 1.9 percent, Frankfurt's DAX. was down 0.8 percent, and Paris's down 1.8 percent.

There was no activity on Wall Street because of the U.S. public holiday.

The Dow Jones fell by 2.8 percent and the Nasdaq ended down 3.9 percent on Friday after a report showing an inflation-free U.S. economy failed to ease growing worries that interest rates will have to keep rising.

Dealers said the closure of U.S. markets meant it was difficult for euro zone government bonds to build on early gains.

"We haven't seen a lot. It's been a very, very quiet day in the street as well as with clients," said one London-based euro debt dealer.

"Equities are down again. That, at least in the cycle we are in at the moment, is a positive for debt. That's part of this whole story. But it's not that we've seen big movement from equities into fixed income," he added.-Reuters