Eurozone bond yields fall on QE launch but Greece jitters resurface

By John Geddie

Most euro zone government bond yields fell on the first day of the European Central Bank's sovereign debt purchase programme, with only fears about Greece's funding spoiling Monday's launch party.

German 10-year bond yields -- the bloc's benchmark -- fell 4 basis points to 0.36 percent, clawing back ground lost on Friday after strong U.S. jobs data raised the chance of an interest rate hike in the world's biggest economy.

Other euro zone equivalents opened around 2-5 bps lower, except for Greek 10-year paper which rose on concerns the European Union might reject reform proposals vital to unlocking new bailout cash for Athens.

"Markets will open a new chapter today,» said Commerzbank strategist David Schnautz.

Euro zone finance ministers are meeting on Monday in Brussels to discuss a letter of pledged reforms sent by Athens last week.

The chair of the meeting, Jeroen Dijsselbloem, said on Sunday that the Greek proposal was not enough to unlock further aid. Time is pressing because Greece is expected to run out of cash later this month.

Should Brussels ultimately reject Greece's proposals, the country could call a referendum or have early elections, its finance minister said on Sunday.

Greek 10-year yields opened 8 bps higher at 9.58 percent .

This nervousness also saw lower-rated debt in the euro zone, which is expected to have the most potential to perform under quantitative easing, slightly lag the rally seen in German and other top-rated bonds.

Italian and Spanish 10-year yields dipped 2 bps to 1.30 and 1.22 percent, respectively.

After months of speculation, investor attention is now fixed on how the ECB's programme will work in practice.

While analysts expect a smooth...