LONDON: Bund futures rose on Friday as lacklustre corporate earnings, downgrades to French banks' ratings and record unemployment in Spain highlighted the pitfalls still facing the global economy.
Results from global giants Apple and Amazon undershot expectations overnight, while in Europe, Renault, Saint Gobain, Gucci and Publicis weighed in with gloomy earnings and outlooks, putting downward pressure on European stocks.
Standard & Poor's cut the rating of French banks including BNP Paribas - a stark reminder of the problems still besetting the euro zone's second largest economy - but French yields showed little reaction.
The bout of negative news whet appetite for safe-haven Bunds but they were seen trading within recent tight ranges ahead of US third quarter gross domestic product (GDP) data later in the day.
"Not only the corporate news but the economic data continue to be quite weak," Ricardo Barbieri, strategist at Mizuho said.
Other data showed French consumer confidence fell in October to its lowest level in nine months, while in Italy, manufacturing business morale unexpectedly fell in October due to worsening outlook for order levels.
"Overall I think it's a confirmation that Q4 is highly likely to see a larger contraction in GDP than Q3 and we don't have as yet anything pointing to a recovery in Q1 of next year," Barbieri added.
German Bund futures rose 53 ticks to 140.93 pushing 10-year yields down 5.1 basis points to 1.53 percent.
Borrowing costs over ten years rose as far as 1.625 percent in the previous session but market participants say there tends to be buying above 1.60 percent.
"When we get to bond yields above 1.6 (percent) there is clearly interest in extending positions in Germany," Barbieri said referring to the practice of buying longer-dated bonds.
US growth is expected to have picked up to an annualised 1.9 percent from 1.3 percent in the previous quarter, according to a Reuters poll.
But even such a rise would not be considered enough to make much of a dent in unemployment, leaving in place doubts about the economy that have underpinned safe haven bonds and kept the Federal Reserve buying Treasuries.
French 10-year yields fell 1.6 bps to 2.13 percent.
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