German bonds snap 2-day drop; Italy debt slides on slower growth

German 10-year government bonds snapped a two-day decline and Italian and Spanish securities fell amid signs that growth in the euro area is slowing.

Benchmark bunds headed for the biggest weekly gain since July after a report showed German factory orders unexpectedly plunged in September as demand from the euro region slumped. Markit Economics also said its index of euro-area services and manufacturing output for October fell more than initially estimated to a 28-month low. European Central Bank Executive Board member Juergen Stark said today the euro area’s economy may not grow at all in the fourth quarter.

German 10-year yields fell one basis point to 1.91 percent at 11:25 a.m. London time. The 2.25 percent security due September 2021 climbed 0.055, or 55 euro cents per 1,000-euro ($1,384) face amount, to 103.045.

Italian 10-year bond yields rose five basis points to 6.25 percent and the rate on similar maturity Spanish securities increased three basis points to 5.53 percent.