European govt bonds higher as risk aversion encourages safe haven buying

European govt bonds higher as risk aversion encourages safe haven buying

	Published : Fri, 17 Aug 2007 11:11 By : Agencies Print this Story

LONDON (Thomson Financial) - European government bonds were higher as the high level of risk aversion in the market continued to encourage buying of safe-haven assets.

Gains were were not nearly as sharp as yesterday, however, as European stock markets steadied after yesterday's steep losses.

'Flight-to-quality bids prevail and offer support for bond markets along with weak equity markets ... in the absence of key economic data, the market will remain driven by news on credit and technicals,' analysts at BNP Paribas said.

The only data of note today is the University of Michigan consumer sentiment index late this afternoon, but this survey could provoke more interest than usual given the high sensitivity of US consumers to developments on financial markets.

'It will be interesting to see whether the recent slide in equity markets and, for that matter, house prices have already started to weigh on consumer confidence with the preliminary University of Michigan index due this afternoon,' analysts at WestLB said.

'Should this come through clearly on the low side of consensus, then the markets may bed even more aggresively that the recent turmoil will overflow into the real economy,' they said.

Over in the UK meanwhile, gilts were also higher and outperforming their European counterparts after underperforming yesterday in the wake of stronger-than-expected UK retail sales data.

At Yield Change on

1046 BST pct previous close

Sept euribor future (Liffe) 95.555 dn 0.020

Dec euribor future (Liffe) 95.670 up 0.005

GERMANY

Sept bund future (Eurex) 113.67 up 0.15

3.75 pct Jul 2017 govt bond 100.01 4.24 up 0.12

FRANCE

3.75 pct Apr 2017 govt bond 95.45 4.33 up 0.02

ITALY

4.00 pct Feb 2017 govt bond 96.32 4.53 up 0.11

Sept gilt future 107.06 up 0.37

4.00 pct Sept 2016 govt bond 92.55 5.03 up 0.26

Sept short sterling future 93.64 dn 0.03

Dec short sterling future 93.95 dn 0.01

jessica.mortimer@thomson.com

jkm/bsd

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