Eurozone bonds yields fell on Friday as a cautious European Central Bank helped markets regain their footing after a US-led sell off earlier in the week. ECB chief Mario Draghi played down concerns over softness in the euro zone economy on Thursday as the ECB sought to bolster expectations for a gradual withdrawal of its monetary stimulus.
Analysts said that investors who had been reluctant to buy European government debt because of ECB event risk had moved back into the market. "The ECB meeting was taken on the dovish side, because there was no mention of monetary policy and they seemed to be wavering as to whether to announce what to do (on quantitative easing) at the June or the July meeting," said Rabobank rates strategist Lyn Graham-Taylor. Euro zone borrowing costs were down 1-4 basis points across the board.
Germany's 10-year Bund yield hit a one-week low of 0.564 percent, below six-week highs hit earlier this week at 0.655 percent. It was set for the biggest weekly fall in four weeks, according to Reuters data. Eurozone debt markets were also bolstered after data showed Britain's economy slowed much more sharply than expected in the first three months of 2018, raising questions over whether the Bank of England will raise rates next month.
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