LONDON, Oct 29 (Reuters) - The euro fell briefly and German government bond yields rose on Monday, after a report that German Chancellor Angela Merkel has told leaders of her Christian Democrats (CDU) that she will not seek re-election as party chairwoman in December.
Merkel has been CDU chairwoman since 2000 and giving up the role would start a race within the party to succeed her as chancellor.
The euro fell as much as 0.4 percent to the day’s low of $1.1361 after the news. It later erased some of those losses to trade down 0.1 percent at $1.1389, roughly where it stood before the report.
The euro zone’s leading stock index rose 0.7 percent by 0941 GMT and Germany’s DAX gained 1.1 percent. Both indices benefit from a weaker euro helping exporters.
German bond yields extended their rise, with the 10-year Bund yield last up almost 4 bps at 0.39 percent.
“This news would signal the quality of German credit would deteriorate because markets are extrapolating from the results of the weekend state election to conclude that the next government will have a bigger populist portion to it,” said Mizuho rates strategist Peter Chatwell. (Reporting by Dhara Ranasinghe, Tommy Wilkes and Helen Reid, Editing by Abhinav Ramnarayan)