Germany’s government bonds were little changed before a report that analysts said will show the euro region’s economy contracted in the fourth quarter. Benchmark 10-year bund yields were about three basis points from the highest level in more than a week after data showed both France and Germany’s economies shrank more than forecast in the last three months of 2012. Gross domestic product in the 17- nation currency bloc shrank 0.4 percent from the third quarter, when it contracted 0.1 percent, the European Union’s statistics office in Luxembourg will say today, according to the median forecast of 45 economists in a Bloomberg News survey. German 10-year bunds yielded 1.67 percent at 7:26 a.m. London time, after rising to 1.70 percent yesterday, the most since Feb. 4. The 1.5 percent security due in February 2023 traded at 98.415. German gross domestic product contracted 0.6 percent from the third quarter, when it gained 0.2 percent, the Federal Statistics Office in Wiesbaden said today. That compares with a median forecast of a 0.5 percent drop in a Bloomberg survey. The French economy also shrank more than forecast, with GDP falling 0.3 percent in the fourth quarter. German government bonds handed investors a loss of 1.8 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Italian debt returned 1.2 percent and Spanish securities gained 2.2 percent. To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@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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