German government bonds fell, with 10-year yields rising to the highest level since October, as speculation the euro-area financial crisis is easing reduced demand for the region’s safest assets. Germany’s two-year rates climbed to the most since June as Spanish and Irish borrowing costs declined at debt sales. French, Austrian and Dutch bonds also dropped as investors sold the securities of the euro-area’s so-called core markets. French 10-year rates rose to the highest in more than two months as yields increased at an auction. “It’s part of ongoing risk-on sentiment,� said Luca Jellinek, head of interest-rate strategy at Credit Agricole CIB in London, referring to the decline in bunds. “There’s also a feeling in the market that the French auction didn’t go as well as many people had expected.� Germany’s 10-year yield rose four basis points, or 0.04 percentage point, to 1.61 percent at 11:19 a.m. London time after rising to 1.62 percent, the highest level since Oct. 25. The 1.5 percent bond maturing in February 2023 fell 0.39, or 3.90 euros per 1,000-euro ($1,336) face amount, to 99.005. The German two-year yield rose as much as six basis points to 0.18 percent, the most since June 29. France sold 7.98 billion euros in debt as receding concern that the euro will break up diminished demand for safe-haven securities. The Paris-based treasury sold 4.045 billion euros of May 2018 notes at an average yield of 1.06 percent, compared with 1.01 percent for October 2018 securities on Dec. 6. The five- year notes were France’s first medium-term securities that include collective action clauses. It also auctioned two- and four-year securities. France’s 10-year yield rose five basis points to 2.18 percent after rising to 2.19 percent, the most since Nov. 7. To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; David Goodman in London at dgoodman28@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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