Late-2000s financial crisis

LONDON – German government bond yields hit a record low on Tuesday as a monthly gauge of economic sentiment reinforced fears the eurozone’s engine may be slipping toward recession.

The ZEW institute’s index of German economic sentiment turned negative for the first time since late 2012, falling to -3.6 in October from 6.9 the previous month.

European Central Bank (ECB) funding to Greek banks fell in September by 2 billion euros, Greek central bank data showed on Tuesday.

ECB funding dropped to 42.56 billion euros last month from 44.56 billion euros in August.

By Lukanyo Mnyanda

Greece’s government bonds declined, pushing 10-year yields to the highest since May, after euro-area finance ministers clashed with the nation’s leaders over their desire to sever a bailout program.

MPs are due to begin discussing the details of the 2015 draft budget on Tuesday.

The Economic Affairs Committee will debate the draft budget during three sessions before the document is returned to the Finance Ministry for final changes.

Greece might secure a further safety net of credit from its eurozone partners if it manages to meet the strict terms required to exit its bailout at the end of this year, a source close to discussions told Reuters yesterday.

Greece’s bonds slid on Monday even as Prime Minister Antonis Samaras won the confidence motion he called to head off an opposition challenge.

Rates on Greece’s 10-year bonds jumped 11 basis points to 6.71 percent, ending a two-day drop.

Greek government bond yields rose to a one-week high on Tuesday after a newspaper reported that the country’s European Union and International Monetary Fund lenders had interrupted their bailout review over a disagreement with Greek officials.

The government denied the report.

Greek Finance Minister Gikas Hardouvelis denied reports on Tuesday that inspectors from the country's EU/IMF lenders had interrupted their bailout review in Athens over a disagreement with Greek officials.

Greek bonds saw their yields climb as the government announced it plans to improve its yield curve with sales of seven- and 10-year government debt, according to the 2015 draft budget presented on Monday by Alternate Finance Minister Christos Staikouras.

Greek 10-year yields increased nine basis points to 6.44 percent and the 30-year rate climbed seven basis points to 7.06 percent.

Greece will report a primary budget surplus of 2 percent of national output this year, beating the 1.5 percent of GDP target set in its EU/IMF bailout, the government's draft 2015 budget projected on Monday.

Athens also predicted its economy would exit a six-year recession and grow 0.6 percent this year, in line with previous forecasts.