LONDON: Euro zone government bond yields fell on Tuesday after surprisingly weak U.S. jobs data fuelled expectations that loose monetary policies around the world would support asset prices for longer than previously thought.
The data, published on Friday when European markets were closed for the Easter holidays, showed U.S. employers added just 126,000 jobs in March, compared with expectations of 245,000.
That might push the prospect of a Federal Reserve interest rate increases further down the line, keeping U.S. borrowing costs -- which are often closely tracked by European bond yields -- subdued.
Benchmark 10-year German Bund yields were a touch lower at 0.18 percent. Equivalent Spanish and Italian yields fell 5-6 basis points to 1.19 percent and 1.21 percent, respectively.
"The market is digesting the disappointing payroll report," said Martin van Vliet, senior rate strategist at ING.
Most euro zone bond yields trade near record lows one month into the European Central Bank's trillion-euro asset purchase programme.
The ECB's scheme has allowed yields on low-rated bonds to fall despite renewed concern about Greece's future in the currency union, although analysts and traders say it has played a role in supporting top-rated Bunds.
"Bunds should remain supported in the wake of softer NFPs and ahead of critical days in Greece," Commerzbank rate strategist Benjamin Schroeder said.
Greek Finance Minister Yanis Varoufakis said on Sunday that Greece "intends to meet all obligations to all its creditors, ad infinitum," seeking to quell default fears before a big loan payment Athens owes the IMF later this week.
Athens is fast running out of cash and has yet to agree with its European creditors a reform package that would unlock further financial assistance.
Greece's deputy finance minister said on Monday its largest creditor, Germany, actually owes it nearly 279 billion euros in reparations for the Nazi occupation of the country. Threats by Athens to push for reparations have angered Berlin in the past.
Greek 10-year bond yields were down 10 basis points at 11.89 percent, a relatively small move by the standards of the country's illiquid debt market.
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