LONDON: Top-rated German bond yields fell near a two-week low on Tuesday as explosions in Brussels spurred demand for safe haven assets amid fears the incident could be the latest in a number of militant attacks in Europe.
The European benchmark yield, which moves inversely to prices, fell 4 basis points to 0.18 percent, its lowest since March 10. The fall led a broad rally across most of the region's debt markets after reports of explosions at Brussels airport and a metro station.
Elsewhere, riskier European stocks shed about 1 percent while the Japanese yen and gold -- also seen as a refuge for investors in times of stress -- rose.
"The tragic events in Brussels have led to a flight-to-quality, which we are seeing in the bond markets," said Nick Stamenkovic, a bond strategist at RIA Capital Markets.
Hawkish comments from several Federal Reserve policymakers on Monday had been exerting upward pressure on bond yields before the incident as they raise the prospect of further rate hikes in the United States, the world's largest economy.
Atlanta Fed President Dennis Lockhart said the United States may be in line for a rate hike as soon as April, while Richmond Fed President Jeffrey Lacker said US inflation is likely to accelerate in the coming years and move toward the Fed's 2 percent target.
Yields continued to rise slightly when markets opened on Tuesday but then sharply reversed course after reports that explosions tore through the departure hall of Brussels airport and a second blast struck a metro station in the capital shortly afterwards.
Belgian public broadcaster RTBF said the airport explosion had killed up to 10 people and injured 30 others.
"There was no reason for bonds to open so strongly so you have to assume that it has something to do with this attack in Brussels," KBC strategist Piet Lammens said.
Analysts said mixed euro zone data was also a factor in falling yields as it supports the need for ongoing monetary stimulus by the European Central Bank.
Private sector growth data in the bloc's powerhouse Germany was steady in March but the manufacturing component saw its lowest rise in output since November 2014.
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