Weak German bond sale 'alarm signal': Nowotny
Weak demand for German bonds in an auction on Wednesday is an "alarm signal," Austria's central bank head and European Central Bank governing council member Ewald Nowotny said.
Investors shunned Wednesday an issue of German 10-year bonds, considered the gold standard of eurozone debt, making bids of only 3.9 billion euros ($5.2 billion) for the 6.0 billion euros of securities on offer.
The German Finance Agency called the outcome a "reflection of the extraordinarily nervous market conditions" caused by the eurozone debt crisis.
The outcome was all the more surprising because investors have been buying German bonds up to now as a safehaven for their money at the expense of weaker eurozone states such as Italy and Spain, in turn driving up their borrowing costs to dangerously high levels.
© 2011 AFP