Bonds buoyed by Greek return as equity gains fizzle out

Thu Apr 10, 2014 8:11am EDT
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By Sudip Kar-Gupta

LONDON (Reuters) - Greece's much-heralded return to the bond market buoyed euro zone debt on Thursday, outperforming flat equity markets as gains driven by easing U.S. interest rate concerns fizzled out.

Just two years after being at the epicenter of the euro zone's sovereign debt crisis, Greece drew solid demand at a five-year bond sale that aimed to raise 3 billion euros and offered a yield of 4.95 percent, beating Athens' 5 percent target.

The country's deputy prime minister Evangelos Venizelos said the sale had been at least eight times oversubscribed.

Global equities were more subdued, giving up gains spurred by minutes from the Federal Reserve's last meeting, which suggested officials would be cautious about raising interest rates.

Financial markets pushed out expectations of a first Fed rate hike by about six weeks, to July 2015, trading in interest-rate futures showed.

That weighed on the dollar, which fell to a three-week low versus the yen and the Swiss franc on Thursday while gold rose nearly 1 percent to a 2 1/2 week high at $1,323.50 an ounce.

Futures on the U.S. S&P equity index were down 0.2 percent while futures on the Dow Jones index edged up by 0.1 percent, pointing to a flat start for Wall Street after gains of more than 1 percent on Wednesday following the Fed minutes.

In Europe, investors looked optimistically to Greece's successful bond market return for further evidence that the euro zone's economic recovery is gathering pace.   Continued...

Two businessmen look at an electronic stock quotation board, as cherry blossoms bloom, outside a brokerage in Tokyo April 9, 2014. REUTERS/Issei Kato