German yields hit fresh multi-week lows, euro area spreads widen

Feb 6 (Reuters) - German ⁠government bond ‌yields fell to multi-week lows ⁠on Friday and spreads versus other euro zone bonds widened as investors ‍steered away from risk assets.

A global stock rout on Wall Street ‍spilled into Asia and Europe on Friday, leaving investors dazed and many ⁠regional benchmarks in the red.

With Thursday’s European Central Bank meeting offering no reason to change the euro area rate outlook, German bonds ​took their cue from U.S. Treasuries while also keeping an eye on the Bank of England’s dovish surprise.

Germany’s 10-year government bond yield, the euro area’s benchmark, fell 2.5 basis points (bp) ‍to 2.82%, after hitting 2.813% its lowest since January 19.

U.S. Treasury ‌yields dropped, with the 10-year down 2 bps at 4.19% in early London trade, after ‌falling the day before as two economic releases pointed to a weaker than expected jobs market ahead of next week's highly ‌anticipated payrolls report for January.

German 2-year yields fell 2.5 bps to 2.047%, ​its lowest since December 3.

Italy’s 10-year government bond yield was down one bp to 3.46%. The gap versus Bunds widened to 63 bps. ⁠It reached 53.50 in mid-January, its lowest ‍level since August 2008.

French spread rose to 62 bps, its highest since January 23. It hit ​55.15 on January 28, its lowest since June ⁠2024.

Analysts and investors argued that spreads had run their course in terms of tightening, barring progress on European financial integration. (reporting by Stefano Rebaudo; editing by William Maclean)