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European bonds jump on tracking weak crude

The European bonds gained on Wednesday as investors pour into safe-haven assets amid deepening economic growth fears after Kuwait workers ended 3-day strike that had reduced crude output from OPEC countries, pushing oil prices to new session low.

 The benchmark German 10-year bonds yield, which is inversely proportional to bond price fell 15.17 pct to 0.152 pct, French 10-year bunds yield dipped 4.38 pct to 0.497 pct, Italian equivalents tumbled 1.10 pct to 1.390 pct, Spanish 10-year bonds yield inched down 0.71 pct to 1.534 pct and British 10-year gilts yield fell 1.79 pct to 1.497 pct, Netherlands 10-year bonds yield inched down 6.14 pct to 0.367 pct by 0840 GMT.

The Eurozone bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the European Central Bank's target. Today, Kuwaiti oil and gas labourers finished a 3-day strike that had briefly cut the OPEC crude output to half, which drag oil prices down. On Sunday, the negotiations between Petroleum Exporting Countries (OPEC) and Russia failed to reach an agreement in the Doha round of talks to strike a deal on oil output freeze. The International benchmark for crude oil prices, Brent futures fell 2.23 pct to $43.05, while West Texas Intermediate crude oil dipped 2.24 pct to $10.16 by 0840 GMT.

On the other hand, German March Producer Price Index stood flat at 0 pct, against market expectation of +0.2 pct, from down 0.5 pct in February. Energy prices were a big contributor, down 9.2 pct as compared to March last year, with prices of intermediate goods fell 2.3 pct and price of non-durable goods 0.3 pct lower.

Lastly, the investors will now focus on the ECB governing council meeting on Thursday, which is expected to culminate in the decision to leave policy unchanged.

Meanwhile, the pan-European STOXX 600 index fell 0.22 pct and the euro-are blue-chip gauge, the STOXX 50, dipped 0.08 pct. The FTSE 100 Index is down 0.33 pct, the DAX trading 0.15 pct lower and the CAC-40 fell 0.30 pct by 0845 GMT.

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