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German bund sags amid fading Brexit angst

The German bunds slumped on Monday as the chances of Britain leaving the EU were seen receding after the latest polls by various corporate bodies in the United Kingdom in run-up to the June 23 Brexit referendum indicated that the percentage of citizens in favor of 'Remian' has gained a narrow lead against those who want to 'Leave'.

Also, firm crude oil prices and stronger risk sentiments discouraged investors from safe haven buying.

The yield on the benchmark 10-year bonds, which moves inversely to its price rose 4 basis points to 0.057 percent, yield on super-long 30-year bonds jumped 6 basis points to 0.637 percent and the yield on short-term 2-year note climbed 2-1/2 basis point to -0.577 percent by 09:00 GMT.

A recent opinion poll showed that British voters have swung and now started to favour remaining in the European Union. A YouGov poll for The Sunday Times newspaper published at the weekend showed 44 percent supported remaining in the EU, as compared to 43 percent who supported leaving, based on interviews conducted on Thursday and Friday. Two other polls also showed public opinion tilted towards the 'Remain' camp after the killing of a UK politician Jo Cox on last Thursday.

The implied probability of a 'Remain' vote in Thursday's EU referendum has hardened further, to 74.6 percent, after jumping to 72 percent earlier in the Asian session, up from 60 percent to 67 percent, on Friday, according to the latest odds from bookmaker Betfair.

Also, the final European Union referendum phone poll by BMG Research showed Bremain at 53.3 percent vs Brexit on 46.7 percent. On the other hand, including the ‘undecided’, vote for Remain stood at 46 percent vs Leave 43 percent and undecided 11 percent. The online poll has Leave 55 percent Remain compared to Leave 45 percent.

A British member of parliament, Jo Cox, was shot dead on last Thursday, resulting in the suspension of campaigning for this week’s referendum on the country's EU membership. Cox was one of the members of parliament advocating continued British membership.

In addition, the Germany May PPI May rose 0.4 percent m/m, tad higher than the market consensus of +0.3 percent m/m, from +0.1 percent in April. On annual basis, it improved -2.7 percent y/y, market expectations was for -2.9 percent, as compared to previous -3.1 percent.

Meanwhile, the crude oil prices jumped more than 1 percent due to weaker US dollar and easing fears of a UK exit from the European Union. The International benchmark Brent futures rose 1.97 percent to $50.13 and West Texas Intermediate (WTI) climbed 1.63 percent to $48.76 by 09:00 GMT. The German stock index DAX Index rose 3.51 percent at 9,971 by 09:00 GMT.

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