LONDON: German Bund yields held near one-month lows on Wednesday after euro zone factory activity data met expectations and ECB President Mario Draghi said more time was needed to decide about boosting its stimulus programme.
The euro zone data showed a small overall slowdown in business growth but was broadly in line with a Reuters poll and eased fears that weak Chinese growth might have been more of a drag on Europe.
"A lot of people are saying that the data isn't as weak as people assumed," Merrion Stockbrokers chief economist Alan McQuaid said.
Activity in China's factory sector shrank for a seventh straight month in September, to its weakest level in 6-1/2 years, the preliminary Caixin/Markit China Manufacturing Purchasing Managers' Index showed.
Economists polled by Reuters had expected slower contraction than in August.
German 10-year Bund yields, which set the standard for euro zone borrowing costs, were flat on the day at 0.59 percent, almost matching the one-month low hit on Tuesday.
Bund yields have fallen about 20 bps in September as the slowdown in China has prompted major central banks across the world to shift to a softer tone.
European Central Bank chief Draghi told the European Parliament the central bank needed more time to decide if it will expand its 1 trillion euro plus asset-buying programme.
The speech came after hints from ECB policymakers in recent days that the bank could expand its bond buying programme if necessary.
Draghi's comments caused little reaction in the bond market and other euro zone bond yields were flat or a touch higher.
He said there were renewed downside risks to European inflation and growth, but it was too early to judge whether they would derail the inflation trajectory anticipated by the ECB when it expanded the asset purchase programme in January.
The US Federal Reserve left interest rates unchanged last week, citing concern over global growth and China.
In supply, Germany sold 3.3 billion euros of 0 percent two-year debt at an average yield of -0.26 percent.
Demand was strong, with the sale attracting bids worth 2.4 times the amount allotted.
This contrasted with a string of failed auctions of super-long bonds that saw bids worth less than the amount on offer.
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