Euro zone bonds sink as gilt market turmoil rattles global investors

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Euro zone government bond yields rose on Wednesday, tracking weakness in the UK gilts market after the Bank of England governor gave pension funds and other investors three days to fix their problems before it withdraws support.

Although the issues affecting the UK bond market are largely domestic, gilts tumbled, pushing 30-year yields to their highest since 2008, which in turn put pressure on the euro zone market throughout the day.

Yields on the 10-year German Bund , which serves as the regional benchmark, rose as much as 8.7 basis points to a session peak of 2.396%, the highest since August 2011. It was last up 7 bps on the day at 2.308%, while two-year Schatz yields were less volatile, rising 6 bps to 1.845%.Ten-year Italian BTP yields , which act as a yardstick for the health of the euro zone's more indebted member countries, rose 11 bps to 4.685%.

Final inflation data is due on Thursday from Germany, but before that, investors will be able to parse through the minutes of the Federal Open Market Committee's most recent meeting later on Wednesday.

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