European bonds climb after Doha failure

April 18, 2016

The European bonds gained on Monday as investors pour into safe-haven assets amid deepening economic growth fears after the frailer of Doha negotiation coupled with weak equities market.

The benchmark German 10-year bonds yield, which is inversely proportional to bond price fell 2.24 pct to 0.131 pct, French 10-year bunds yield dipped 0.33 pct to 0.479 pct, Italian equivalents tumbled 1.18 pct to 1.332 pct, Spanish 10-year bonds yield inched down 0.86 pct to 1.498 pct and Portuguese 10-year bonds yield dipped 2.72 pct to 2.932 pct and Netherlands 10-year bonds yield inched down 0.28 pct to 0.350 pct by 0910 GMT.

The negotiations between Petroleum Exporting Countries (OPEC) and Russia failed to reach an agreement in the Doha round of talks on Sunday to strike a deal on oil output freeze. On the other hand, Saudi Arabia said that they were ready to freeze the current level of crude oil production on condition that all other producing countries follow the same.

The European bonds have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures fell 3.29 pct to $41.70 and West Texas Intermediate (WTI) tumbled 4.73 pct to $38.45 by 0840 GMT.

"The absence of an oil agreement is having some impact and it is a bit of a risk-off environment but we doubt it will go very far and the ECB meeting this week will be a low profile one," said KBC strategist Piet Lammens on Reuters.

Lastly, the investors will now focus on the ECB governing council meeting on Thursday, which is expected to culminate in the decision to leave policy unchanged.

Meanwhile, the pan-European STOXX 600 index fell 0.19 pct and the euro-are blue-chip gauge, the STOXX 50, dipped 0.56 pct. The FTSE 100 Index is down 0.56 pct, the DAX trading 0.25 pct lower and the CAC-40 tumbled 0.45 pct by 0927 GMT.

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