European Government Bonds Drop as Stock Rally Eases Demand for Safe Assets

(Bloomberg) -- European bonds fell, snapping the
steepest rally in two months yesterday, as gains in global stock
markets eroded demand for the safety of fixed-income assets.

Debt's decline sent 10-year yields up from near a three-week
low after the Nasdaq Composite Index of shares closed at a six-
year high. Equity indexes in Asia and Europe also rose as
speculation weakness in the U.S. subprime mortgage market will
curb global growth eased, and as concerns spurred by terrorist
plots in the U.K. last weekend waned.


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Enel, BT, Ericsson Drive Surge in Bond Issues to $22 Billion This Month

(Bloomberg) -- Enel SpA, Italy's largest utility,
and BT Group Plc, the biggest U.K. phone company, led $22 billion
of European bond sales in the busiest month this year as
borrowing costs rise.

Debt sales this month already beat the $21.3 billion during
all of May and are the highest since the $28.9 billion issued
last November, according to data compiled by Bloomberg.
Steelmaker Arcelor Mittal and Europe's largest mobile-phone
retailer Carphone Warehouse may add to the total before month-
end, according to banks managing the deals.


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Japanese Two-Year Yields Climb Above 1 Percent for First Time Since 1997

(Bloomberg) -- Japan's two-year government notes
declined, sending yields above 1 percent for the first time in a
decade, on speculation faster global economic growth will prompt
the Bank of Japan to increase borrowing costs this year.

Debt in Japan tracked a drop in Treasuries that yesterday
boosted two-year yields to levels unseen since August, after an
index of U.S. service industries rose to the highest in more than
a year. Japan's two-year notes dropped and 20-year bonds gained
after Bank of Japan Governor Toshihiko Fukui yesterday said the
bank will ``take necessary action in a timely way.''


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Japanese Five-Year Yields Near Highest Since July on Outlook for Exports

(Bloomberg) -- Japan's five-year note yields held near
the highest since July after a report showed U.S. service
industries grew at the fastest pace in more than a year, adding to
optimism exports will help sustain Japan's economic expansion.

Debt in Japan followed a slump in Treasuries that yesterday
pushed two-year U.S. yields to the highest since August. Japan's
two-year yields climbed above 1 percent today for the first time
in a decade on speculation signs of faster global growth will
prompt the Bank of Japan to increase borrowing costs.


Read more at Bloomberg Bonds News