European Bonds May Advance on Speculation Oil Will Crimp Growth
European bonds may gain amid speculation oil prices near a record will crimp the outlook for economic expansion in the euro region. The 10-year German bund rose for three straight weeks through Aug. 26, and gains for debt yesterday pushed the yield to its lowest in almost two months, on concern rising energy costs will erode spending and undermine confidence among European consumers. `We see the oil price surging and this supporting the bond market,'' said Kornelius Purps, a fixed-income strategist at HVB Group in Munich. ``Yields might drop further.'' The yield on the benchmark 10-year bund rose 1 basis point, or 0.01 percentage point, to 3.16 percent by 7:30 a.m. in London after yesterday falling to as low as 3.13 percent, its lowest since July 7. Bond yields move inversely to prices. Yields may drop to 3 percent in the next month, said Purps. The price of the 3 1/4 percent bund due July 2015 fell 0.08, or 80 cents per 1,000-euro ($1,222) face amount, to 100.73, according to Merrill Lynch & Co.
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