* Doubts whether stimulus can last as policymakers split
* German 10-/30-year bond yield spread widest in 18 months
* Most euro zone yields lower on oil drop, weak U.S. data
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
(Updates prices, adds detail)
By Abhinav Ramnarayan
LONDON, June 2 Increasingly loud calls within
the European Central Bank (ECB) to reel in its monetary stimulus
appear to be dampening demand for long-dated government bonds in
the euro zone.
Yields, which move inversely to prices, have been rising
faster on Germany's 30-year bonds than 10-year bonds to the
extent that the gap between the two benchmarks hit its widest
point in 18 months on Friday.
Investors can rack up greater losses on longer-dated bonds
because they tend to have a higher duration and are more
volatile when the outlook for monetary policy changes.
Duration is a measure in bond markets to calculate the
number of years of coupon payments needed to make back an
While ECB chief Mario Draghi insisted this week that
extraordinary stimulus measures are still necessary, other
policymakers - led by Bundesbank President Jens Weidmann - have
opposed this view ahead of next week's ECB meeting.
Analysts say this split is behind the reduced demand for
long-dated bonds, while the potential for more issuance in that
part of the curve as borrowers seek to lock in low costs could
also be playing a role.
"While there are many uncertainties about what the ECB will
do, there is a growing feeling that we are now past the peak of
quantitative easing - and in that situation, investors are most
concerned about potential losses on long-dated bonds," DZ Bank
strategist Daniel Lenz said.
The spread between German 10- and 30-year bond yields hit 86
basis points early on Friday, its widest since January 2016,
before narrowing a touch.
Commerzbank said that with speculation around Italy planning
a new 30-year debt sale in the coming weeks, this so-called
"curve steepening" could become more pronounced in its bond
Investors tend to sell outstanding bonds to make room in
their portfolios for new supply, pushing yields higher.
The spread between Italy's 10- and 30-year bond yields was
at 111 basis points, a 2-1/2 month high.
Most 10-year euro zone bond yields edged lower 1-3 bps on
Friday, after weaker-than-expected U.S. jobs data and as a steep
drop in oil prices weighed on the outlook for inflation.
Brent oil tumbled below $50 on Friday on worries that U.S.
President Donald Trump's decision to abandon an international
climate-change pact could spark more crude drilling in the
United States, worsening a global glut.
Irish bonds were one of the bloc's best performers on Friday
ahead of a ratings review of the country by S&P Global.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Reporting by Abhinav Ramnarayan and; John Geddie; Editing by