European Bond Yields Hold Near Lowest in Two Months as Stocks Decline

(Bloomberg) -- European bond yields held near the
lowest in two months as stock markets across the region fell and
corporate-debt risk surged to a record

Bunds reversed earlier losses on speculation investors
switched to the safety of government securities. Benchmark 10-
year yields rose earlier after data showing consumer-price
inflation accelerated in Germany in July, adding to the case for
the European Central Bank to keep raising interest rates.


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European Government Bonds Advance as Stocks Decline on Earnings Concern

(Bloomberg) -- European government bonds rose,
pushing 10-year yields to the lowest in two months, after a
decline in stocks and concern over U.S. subprime losses spurred
demand for the safest assets.

Government debt also advanced for a third day as the risk of
owning European corporate bonds rose, according to traders of
credit default swaps. Business confidence in Germany fell for a
second month, prompting investors to scale back expectations of
further interest-rate increases by the European Central Bank.


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European Government Bonds May Fall on Signs of Continuing Economic Growth

(Bloomberg) -- European bonds may drop for the first
day in three on speculation a report will show confidence in the
euro region increased this month, adding to the case for higher
interest rates from the European Central Bank.

Bunds may snap a two-day winning streak as traders bet a
report will show investor confidence in the $10.4 trillion
economy rebounded. Signs of quicker economic expansion in the
region may lift expectations that inflation, which erodes the
value of the fixed returns paid by bonds, will quicken.


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European Government Bonds Snap Advance After Report Shows Economy Growing

(Bloomberg) -- European government bonds snapped a
three-day advance after reports showed the region's economy
expanded faster than previously estimated and is poised to keep
growing through the year.

Bonds also slid as the European Central Bank said interest
rates are still low enough to support growth, suggesting it sees
room to raise them further. ECB President Jean-Claude Trichet
yesterday said there are ``upside risks'' on inflation.


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European Government Bonds Decline on Interest-Rate Outlook, Stocks Rally

(Bloomberg) -- European bonds dropped for the first
day this week on speculation their rally wasn't justified by the
outlook for higher interest rates and as stock markets rebounded.

Benchmark 10-year bund yields rose from the lowest in a week
after U.S. equities rose and Asian stocks markets rallied today
as concern waned that U.S. subprime-mortgage delinquencies would
spread to the wider economy. European Central Bank President
Jean-Claude Trichet yesterday said the region's inflation outlook
``remains subject to upside risks.''


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European Government Bonds May Fall Before German Factory Production Report

(Bloomberg) -- European government bonds may fall
before a report economists forecast will show German industrial
production rebounded in May, reinforcing speculation the European
Central Bank will keep raising interest rates to curb growth.

Government debt fell last week, sending yields near to near
a five-year high, after President Jean-Claude Trichet signaled
borrowing costs will rise further, and a report showed
manufacturing orders in Europe's largest economy gained more than
expected. Investors added to bets the ECB will lift its key rate
a half percentage point to 4.5 percent by the year-end.


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European Government Bonds Decline in Week on Outlook for Higher ECB Rates

(Bloomberg) -- European government bonds dropped this
week, extending the worst quarterly slump in almost eight years,
after European Central Bank President Jean-Claude Trichet
signaled policy makers may raise interest rates further by year-
end.

Benchmark debt dropped, sending 10-year bund yields to near
a five-year high, as Trichet said inflation in the euro region
needs ``careful monitoring'' after the ECB kept its key rate at 4
percent. Bunds also fell yesterday after a report showed
manufacturing orders in Germany rose more than expected in May.


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Yen Declines to a Record Low Against Euro on Difference in Interest Rates

(Bloomberg) -- The yen fell to an all-time low
against the euro and weakened versus the dollar as rising global
interest rates prompted Japanese investors to buy assets abroad.

The yen fell against all 16 of the most-actively traded
currencies as Japan's 0.5 percent interest rate, the lowest among
developed nations, encouraged investors to borrow in the country
and seek higher returns overseas in a practice known as the carry
trade. The Bank of England yesterday lifted borrowing costs to a
six-year high and the European Central Bank signaled it may raise
its interest rate as soon as September.


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TREASURIES-Bonds fall on stronger services, ADP jobs data

(Reuters) - NEW YORK, July 5 - U.S. Treasury debt prices fell
on Thursday after stronger-than-expected data on jobs and the
services sector suggested to investors the Federal Reserve will
not move to cut official interest rates any time soon.




Bonds got off to a rocky start, following euro zone debt
down before the European Central Bank left rates on hold at 4
percent, as expected, but also signaled a September increase is
likely. In Britain, the Bank of England raised rates by 25
basis points to a six-year high of 5.75 percent.


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ECB May Keep Key Rate at 4 Percent, Wait Until September to Raise Again

(Bloomberg) -- The European Central Bank will
probably keep interest rates unchanged, preferring to wait for
confirmation that economic growth is fanning inflation before
raising borrowing costs again, a survey of economists shows.

Policy makers meeting in Frankfurt today will keep the
benchmark refinancing rate at 4 percent, according to all 42
economists in a Bloomberg News survey. The bank will raise the
rate to 4.25 percent in September, a separate survey shows.


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Euro Declines on View Recent Gains Already Reflect Interest-Rate Outlook

(Bloomberg) -- The euro declined from a record
against the yen on speculation recent gains already reflect the
interest-rate outlook for the European Central Bank.

The European currency also snapped a two-day advance versus
the dollar ahead of the ECB's monthly rate-setting meeting this
week. Economists surveyed by Bloomberg News expect policy makers
to maintain interest rates at 4 percent July 5.


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Taiwan's Monetary Authorities Urge Island's Banks to Accept Time Deposits

(Bloomberg) -- Taiwan's monetary authorities
reiterated they urged banks ``not to reject time deposits'' in a
meeting with executives of five major lenders.

The gathering yesterday was aimed at learning ``more about
the current financial conditions,'' the Central Bank of the
Republic of China (Taiwan) said in a statement issued late
yesterday on its Web site. Central bank governor Perng Fai-nan,
Financial Supervisory Commission Chairman Hu Sheng-cheng and
Finance Minister Ho Chih-chin joined the meeting yesterday, the
statement said.


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Dollar Near Record Low Against Euro on Diverging Interest Rate Outlooks

(Bloomberg) -- The dollar traded near a record low
against the euro and the least in 26 years versus the British
pound as investors favor currencies of countries where interest
rates are more likely to rise.

The dollar has slid against nine of the 10 most-traded
currencies since June 28 when the Federal Reserve kept its
borrowing costs unchanged for an eighth straight meeting. The
Bank of England is forecast to raise rates while the European
Central Bank may signal increases on July 5.


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ECB's Wellink Says Rate Tightening Policy Probably Hasn't Come to an End

(Bloomberg) -- European Central Bank council member
Nout Wellink said the bank is likely to continue raising interest
rates to curb inflation in the 13 countries sharing the euro.

``My personal feeling is the tightening has not yet come to
an end,'' Wellink, who also heads the Dutch central bank, told
reporters in Paris today. ``Whether we take steps will depend on
incoming data. If necessary we will take steps.''


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Hungarian Forint Heads for Second Weekly Gain Versus Euro on Carry Trades

(Bloomberg) -- Hungary's forint is set to advance
for a second week versus the euro as investors continue the so-
called carry trade, attracted by the European Union's highest
interest rate.

The forint headed for its biggest two-week gain in nine
months as investors borrow in low interest-rate currencies such
as the Japanese yen and Czech koruna, and invest in higher-
yielding assets elsewhere. Hungary's central bank holds its next
policy meeting June 25, when economists expect it to hold its
benchmark rate at 8 percent. The European Central Bank's rate is
at 4 percent.


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European Government Bonds Decline as Report Shows Signs of Life in Economy

(Bloomberg) -- European 10-year government bonds
fell, reversing earlier gains, as a report today showed the
economy grew at an unexpectedly rapid pace in June.

Yields on longer-date debt rebounded to near a five-year
high after Royal Bank of Scotland Group Plc's combined index of
services and manufacturing showed the highest reading since
February, contrary to the decline predicted in a Bloomberg News
survey. A separate report tomorrow will probably show German
business optimism is buoyant, stoking expectations the European
Central Bank will keep raising interest rates.


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European 10-Year Bonds Drop for Second Day Before German Confidence Report

(Bloomberg) -- European bonds fell for a second day
before a report that's expected to show business optimism in the
region's largest economy is buoyant, underpinning the case for
the European Central Bank to keep lifting interest rates.

The drop in debt pushed 10-year yields to near a five-year
high as investors reassess the outlook for global borrowing
costs. An index tomorrow is likely to show German business
confidence held near the highest on record this month. Futures
show traders are adding to bets the ECB will raise rates twice
more this year.


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European Bonds Post Sixth Weekly Decline Amid Prospects for Higher Rates

(Bloomberg) -- European government bonds continued
their longest run of losses since January last week after central
bank officials said interest rates may need to rise to curb
accelerating growth in the $10.4 trillion economy.

Benchmark 10-year bonds fell for a sixth week as yields rose
to the highest since August 2002. European Central Bank policy
maker Axel Weber said June 14 that interest-rate policy is
``still far from being restrictive'' on economic growth.


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European Government Bonds Decline on Concern Growth Will Push Rates Higher

(Bloomberg) -- European government bonds fell,
pushing 10-year yields to the highest since August 2002, after
European Central Bank official Erkki Liikanen said the outlook
for growth in the euro region will be ``positive'' for years.

Bund yields have climbed 21 basis points this month as
increasing business investment and hiring in the $10.4 trillion
economy prompts traders to raise bets the ECB will increase
rates twice more in 2007. The bonds pared losses after U.S.
Treasuries rebounded today on speculation higher yields will
increase the cost of borrowing for business and households.


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Emerging Market Debt, Currencies, Slump as Investors Turn More Risk Averse

(Bloomberg) -- Emerging market bonds and currencies
slumped as investors turned more risk averse in the wake of rising
global interest rates and inflation.

New Zealand and South Africa raised interest rates
yesterday, a day after the European Central Bank lifted its
benchmark rate to a six-year high. Fed Bank of Richmond President
said growth in the world's largest economy will rebound, reducing
the chances of a rate cut. An emerging market bond index compiled
by JPMorgan Chase & Co. yesterday dropped the most since October
2005 as demand waned for riskier assets.


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