* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
By Yoruk Bahceli
LONDON, June 4 (Reuters) - Euro zone bond yields held steady
ahead of the ECB's policy meeting where the bank is largely
expected to expand its bond buying programme.
Many analysts expect the European Central Bank to increase
its emergency bond purchases by 500 billion euros, as purchases
at their current rate are expected to run out by October.
Focus is also on whether the bank will expand purchases to
include "fallen angels" - companies that have lost their
investment-grade ratings during the coronavirus crisis.
"It will be a very close call with the hawks potentially
swaying a consensus-minded President Lagarde to defer the
announcement, also to keep pressure on the politicians to
deliver on the EU Commission's €750bn Next Generation EU Fund,"
Commerzbank analysts told clients, referring to last week's
recovery fund proposal.
The market now feels a little more tentative towards an
expansion of the bond purchases, according to Mizuho analysts.
German 10-year yields are up 10 basis points this
week, while their Italian equivalents are up 6 basis
points.
Most euro zone bond yields were marginally changed in early
trade. Germany's 10-year bond yield was up 1 basis point to
-0.34%, near seven-week highs. Italian 10-year yields were near
one-week highs at 1.55%.
In the primary market, France is due to sell up to 11
billion euros of bonds due 2030 and 2052 via an auction.
The German government agreed a new 130 billion euro stimulus
package on Wednesday to be delivered this year and next year,
adding to efforts to speed up the country's recovery form the
coronavirus.
With most of the stimulus due to be provided by the federal
government, Danske Bank analysts said they expect German
government bond issuance to increase.
(Reporting by Yoruk Bahceli; Editing by Andrew Heavens)