-- Bund falls while sovereign bond yields for Italy and Spain ease -- Der Spiegel article provides interest, but German finance ministry denies knowledge of plan -- Event risks later this week. All eyes on Greece PM meeting -- Chemring shares pause for breath after 30% surge; Lonmin continues to slide By Michele Maatouk and Andrea Tryphonides The bund fell heavily while Italian and Spanish sovereign bond yields neared one-month lows on a report the European Central Bank could be considering a cap on peripheral bond yields. An article in Der Spiegel published this weekend stated that the ECB is considering setting interest rate thresholds for each country for the future purchase of government bonds. The article, which didn't specify its source, said under the proposal the ECB would buy the bonds of crisis-hit countries when their interest rates exceed a certain premium to German government bonds. The ECB hasn't commented on the article, but a spokesman for the German finance ministry said Monday he knows of no plans for an ECB interest-rate target, adding that any such plan would be problematic. These headlines hit the euro, which fell to the day's lows. Equities and southern European bond markets, however, were unfazed. At 1025 GMT, Spain's 10-year government bond yield was at 6.18%, down 25 basis points, while Italy's equivalent yield was at 5.72% down seven basis points, according to Tradeweb data. While sovereign bond yields for the euro zone's hot spots eased, the German bund slumped 0.83 to 141.29. In equities, the benchmark Stoxx 600 index was up 0.1% at 273.15. On Friday, the benchmark Stoxx 600 index ended up 0.6% at 272.83; a 13-month closing high. The U.K.'s FTSE 100 was down 0.1% at 5848.02; Germany's DAX gained 0.5% to 7077.03; and France's CAC 40 was up 0.1% at 3491.83. Outside Europe's core, Spain's IBEX 35 was up 0.5% at 7597.80 and Italy's FTSE Mib was up 0.7% at 15,224.68, although Greece's ASE index was 1.7% lower at 628.58. Meanwhile, the euro was losing ground against the dollar, fetching $1.2325 from $1.2335 late Friday in New York. The dollar was at Y79.51 from Y79.57 against the yen. The mood in equity markets was fairly muted as investors looked ahead to several possible catalysts in the euro zone this week that could test the recent resilience of risk assets. "The situation in Greece remains a source of worry," said Credit Agricole Corporate & Investment Bank commenting on the visit of Greece's Prime Minister Antonis Samaras to meet German and French officials, amid speculation he will seek a two-year extension to meet fiscal retrenchment conditions set by the country's official lenders. "Although no real decision regarding future loan tranche disbursement is expected before mid-September, headline effects around those bilateral meetings could create some volatility in periphery spreads and, indirectly, other markets," the bank added. There was little corporate news on the agenda but some of Europe's mid-capitalization stocks were of interest. U.K. military equipment maker Chemring Group said late Friday that it had received "a highly preliminary expression of interest" from private equity firm Carlyle Group. After surging above 30% on Friday in under an hour, Chemring shares were pulling back Monday, trading down 9.5%. Shares in platinum giant Lonmin fell 4.1% after it called on its workers to end a strike following violent clashes with police and the death of 34 people last week. Miners remained defiant despite Lonmin stating that the call to staff was "a last opportunity to return to work" at its shut-down Marikana mine. Lonmin is considering a $1 billion rescue rights issue, according to U.K. newspaper the Sunday Times. Platinum continued to extend its price gains on the possible implications of tensions at Lonmin's Marikana mine for South African platinum output. At 1025 GMT, spot platinum was at $1,466.00, up $10.00. Spot gold was at $1,615.10 a troy ounce, down $1.40. The October Nymex crude oil contract was down two cents at $96.30 a barrel while the October Brent contract was up 67 cents at $114.38. Write to Michele Maatouk at michele.maatouk@dowjones.com and Andrea Tryphonides at andrea.tryphonides@dowjones.com

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