German bond yields drop after Fed highlights inflation, growth lag

LONDON: German bond yields fell sharply on Thursday morning as European investors reacted to the release of minutes from the US Federal Reserve's latest meeting, which noted lagging inflation and the weak world economy.

The minutes released late on Wednesday came as oil prices fell to a 6-1/2-year low, and led some to doubt that the world's largest economy is gearing up to raise interest rates for the first time in nearly a decade next month.

German 10-year yields -- the euro zone benchmark -- fell 5 basis points in early trading to touch 0.59 percent. US Treasury yields have fallen 8 bps since the release of the minutes on Wednesday and were seen trading at 2.12 percent at 0610 GMT.

Bund futures surged 60 ticks to 155.52.