LONDON Dec 8 Short-dated German government bond
yields gave up early falls on Thursday after the ECB unveiled
measures to avert a freeze in short-term funding markets.
The ECB's quantitative easing scheme of more than a trillion
euros ($1.06 trillion) of government bonds has made it hard for
investment funds to source high-quality collateral to use for
borrowing in so called repurchase-agreements, or repos.
But on Thursday, ECB chief Mario Draghi said the central
bank had decided that it would start to accept cash as
collateral for bonds that it lends back out to markets via its
securities lending programme, for up to 50 billion euros.
"They have, to a limited degree, with these measures
introduced a pressure release valve for repo markets," Mizuho
strategist Peter Chatwell said.
Germany's two-year Schatz yield gave up early
falls to trade flat at minus 0.68 percent. The yield earlier hit
minus 0.76 percent, within a whisker of a record low, after the
ECB lowered the yield limit on its bond-buying scheme.
(Reporting by Dhara Ranasinghe; Editing by John Geddie)