Weak data lifts bonds

Tue 29 Jul 2008
LONDON (ShareCast) - European bonds advanced after a report showed that German consumer confidence fell to its lowest in more than five-years amid a backdrop of falling share prices.

GfK (Xetra: 587530) 's index for August, which is based on a survey of 2,000 people, fell to 2.1 from 3.6 in July, its lowest since 2003, as rising energy costs squeezed consumers incomes.

Europe's main markets slipped into the red, with big losses among financial stocks after Citigroup (ASFZ.PK - news) cut its stance on the European banking sector.

The yield on Germany's benchmark 10-year bund fell by 5 basis points to 4.56%.

In the UK, figures from the Land Registry showed a 1% drop in the cost of a home in England and Wales in June, strengthening the appeal of bonds as an investment.

The yield on a 10 year gilt dropped 4 basis points to 4.05%.

Weak economic data in Europe also helps explain the advance in US equities.

The yield on a 10 year US treasury fell by 10 basis points to 4%.

Source: http://uk.biz.yahoo.com/080728/214/i3xt9.html