* France and Spain sell around 13 bn euros of debt
* Yields tend to rise around bond sales
* But investors have eyes on ECB meeting next week
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By John Geddie
LONDON, June 1 Euro zone bond markets came under
some selling pressure on Thursday as a brace of countries
auctioned debt but benchmark yields did not stray far from
multi-month troughs hit earlier this week.
France and Spain sold around 13 billion euros of debt on
Thursday, sales that pushed up yields on outstanding bonds as
investors made room in their portfolios for the new supply.
But the moves were relatively muted as investors had one eye
on the European Central Bank's meeting next week at which it is
expected to strike a cautious tone about future tightening of
policy because of doubts around inflation.
Preliminary data on Wednesday showed euro area inflation
fell below expectations to 1.4 percent in May, well below the
ECB's near 2 percent target and compared to 1.9 percent in
"Inflation this month is...consistent with what ECB
officials have been saying in public in advance of that meeting;
despite strengthening growth, broad inflation pressures remained
weak," RBC's global macro strategist Peter Schaffrik said.
"While we are likely to see the ECB's economic assessment
upgraded, in the forward guidance, we expect that the ECB will
maintain its overall dovish stance next week."
German 10-year bond yields - the bloc's benchmark - rose as
much as 2 basis points on Thursday to 0.32 percent
at one stage, but moved back towards the 0.30 percent mark as
the session wore on, closer to the 0.286 percent one-month low
hit on Wednesday.
Spanish yields were up 2 bps at 1.55 percent, but remain
close to four-month lows hit on Wednesday. French equivalents
were up 1 bps at 0.73 percent having hit 0.705 percent on
Wednesday, their lowest since Jan. 3.
Spain sold 4.6 billion euros of debt at a triple bond sale
of an inflation-linked bond maturing in 2030 and fixed-rate
bonds maturing in 2021 and 2026 bonds.
France meanwhile sold just over 8 billion euros of bonds
maturing in 2027, 2032 and 2039.
ECB policymakers are set to take a more benign view of the
economy when they meet on June 8 and will even discuss dropping
some of their pledges to ramp up stimulus if needed, sources
But some disagree on how quickly the central bank should
change its policy stance and ECB chief Mario Draghi said on
Tuesday that an "extraordinary amount" of monetary policy
support is still needed because of weak inflation.
ECB Governing Council member Ewald Nowotny added on
Wednesday that inflation rates might remain low in the long term
and the ECB's target is therefore likely to be questioned.
For Reuters Live Markets blog on European and UK stock
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(Reporting by John Geddie; Editing by Toby Chopra and Stephen