February 7, 2018 / 9:24 AM / 5 months ago

Peripheral bond yields drop on report German coalition agreed

LONDON, Feb 7 (Reuters) - Southern European government bond yields dropped sharply on Wednesday and extended its recent outperformance over better-rated peers on news of a coalition agreement in Germany viewed as positive for European integration.

Chancellor Angela Merkel’s conservatives and the Social Democrats (SPD) have agreed on a formal coalition deal, a conservative politician and a source involved in the negotiations said on Wednesday.

Italian, Spanish and Portuguese 10-year government bond yields were 5-8 basis points lower on the day, and spreads over benchmark German Bunds tightened. (Reporting by Abhinav Ramnarayan; Editing by Dhara Ranasinghe)

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