Peripheral Debt Falls Central Bank May Buy Bonds speculation Region

bonds Irish, Greek and Portuguese rose, reducing the performance gap with the benchmark German bonds amid speculation the European Central Bank to buy more assets from countries with high deficits to curb the debt crisis.

Ireland 10-year bonds headed for their biggest weekly advance since May 14, when the European Union and the International Monetary Fund announced an endorsement for nations in crisis. The ECB Irish buy bonds today, according to three traders with knowledge of the transactions. Growth of regional service and manufacturing industries accelerated more than initially estimated in November.

"We've seen quite a tightening of spreads in the last two days on increasing the purchase of BCE," said Vincent Chaigneau, head of rate strategy at Societe Generale SA in London. "Investors are worried about buying will continue in the short term. Nobody seems willing to fight this."

The yield on the benchmark 10-year Irish fell for the fourth consecutive day, falling 34 basis points to 8.42 percent, as of 12:42 pm in London. The guarantee of a 5 per cent, maturing in October 2020 gained 1.85, or € 18.50 per 1,000 ($ 1.326) par value, 77.69. Production fell 93 basis points this week, reducing the premium investors demand to hold debt rather than retaining walls to 531 basis points from 646 basis points last week.

The yield on Germany, Europe's benchmark, rose six basis points to 2.87, the highest since May 18.

Increase purchases

Bonds called peripheral countries met yesterday traders said the ECB increased its purchases of government bonds. The central bank bought debt Portuguese and Irish bonds today, said two people with knowledge of the deals we do not want to be identified because the transactions are confidential.

ECB President Jean-Claude Trichet said yesterday policy makers apply the stimulus to the mother "acute" European market tensions. The central bank will maintain its bond program to buy and continue to sterilize the purchases of assets, he said. The ECB offered banks unlimited loans through the first quarter, said Trichet.

The ECB could increase purchases of government bonds to ensure the sovereign debt crisis of decline, as Dirk Schumacher, economist at Goldman Sachs Group Inc. in Frankfurt.

"We remain convinced that the political will among political leaders, including the ECB, to avoid any systemic event is unquestionable," he wrote in a research report dated yesterday. "We could easily see the ECB to increase its purchases of bonds aggressively if things begin to normalize."

Narrowing yields

Portuguese yields on government bonds fell 27 basis points to 6.04 percent, after flooding by levees was reduced to less than 3 percentage points or 300 basis points for the first time since Aug. 24.

Greek 10-year bonds rose, sending the yield up 10 basis points to 11.75 percent, even after Standard & Poor's placed the sovereign nation of BB long-term rating on "CreditWatch" with negative outlook. S & P said the impact assessment of the Stability Pact mechanism called the European Union governing sovereign bonds from July 2013.

Greece risks that have to restructure its debt, even with an extension in terms of loan repayments by the European Union, said John Stopford, head of fixed income in London at Investec Asset Management, who helps oversee 65 billion U.S. dollars for customers.

"You would be wrong to rule out the possibility of restructuring the debt at some point," said Stopford. "Greece has a structural problem and not have to be at risk we have another recession or economic crisis."

Retirement Incentive

Austria said it plans to reduce sales of bonds by up to 27 percent next year as the nation is removed emergency stimulus spending, banks begin to repay the state aid, less debt must be refinanced.

Federal Finance Agency to issue 16 billion euros worth of 19 million euros of bonds in 2011, down from 22 million euros this year, slides were shown to primary dealers said late yesterday. Including instruments such as Treasury bonds, private placements and loans, will issue 22 billion to 25 billion euros, compared with 27 million euros this year.

The 10-year Austrian production rose five basis points to 3.32 percent.

Spanish yields fell six basis points to 5.07 percent and Italian yields little changed at 4.41 percent.

Markit Economics composite index based on a survey of purchasing managers in the euro zone services and manufacturing rose to 55.5 last month from 53.8 in October, damping demand for the security of income assets fixed. Retail sales rose 0.5 percent in October, the European Union statistics office said separately.

"They leave a margin Volver '

LCH Clearnet Ltd. further reduce the margin charged by the Irish operations corresponding bond yields, with the same applies when he rose, his head of fixed income, he said.

"Our tendency is to give room for people as soon as reasonably possible," said London-based fixed income director John Burke in a telephone interview yesterday. "Along the way, was the fact that the levels were that they were reviewing. Also on the back, needs to be sustained when it is below the threshold on the way down, and depends on how far below she is gone and the speed at which it got there. "