Bond yields fall to records as stocks, euro slide on debt crisis

July 23 (Bloomberg) -- Government bond yields in the U.S., U.K. and Germany fell to records, while stocks dropped and the euro traded below its lifetime average against the dollar on concern the region’s debt crisis is deepening. Commodities slid as a Chinese central-bank adviser said growth may slow further.

The yield on the 10-year U.S. Treasury note declined to 1.41 percent at 8:29 a.m. New York time after reaching an all- time low of 1.40 percent. Two-year German yields slumped to as low as minus 0.08 percent and Spanish and Italian yields jumped. The MSCI All-Country World Index and futures on the Standard & Poor’s 500 both fell 1.2 percent. The euro fell for a fourth day, sliding 0.4 percent to $1.2104. Oil fell the most in a month. Credit-default swaps on Spain rose 30 basis points to an all-time high of 635.

There is “heightened investor concern over the escalating euro-zone sovereign debt crisis,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote today in an e-mailed report. “European authorities are still failing to at least stabilize investor confidence in euro-zone sovereign debt, with Spanish government bond yields rising to new post-euro-zone record highs.”

Greece’s creditors meet this week amid doubts that the country will meet its bailout commitments. German Vice Chancellor Philipp Roesler said he’s “very skeptical” that European leaders will be able to rescue Greece. China’s economic expansion may cool for a seventh straight quarter to 7.4 percent in the three months to September, said Song Guoqing, a member of the People’s Bank of China monetary policy committee.

Euro Declines

Germany’s two-year note yield was below zero for the 12th consecutive day and Spain’s 10-year yields surged 22 basis points to 7.49 percent, after El Pais reported that six Spanish regions may ask for aid from the central government. U.S. five-year yields touched an all-time low of 0.54 percent, while 30- year rates also slumped to records. U.K. two-year yields dropped to an unprecedented 0.05 percent, and Norwegian five-year note yields fell to 1.15 percent for the first time.

The euro weakened 0.7 percent to 94.75 yen after touching 94.24, the lowest since November 2000. It dropped as much as 0.6 percent to $1.2082, a level unseen since June 2010. The Australian and New Zealand dollars fell at least 1 percent as growth concerns reduced demand for riskier assets.

The Stoxx Europe 600 Index lost 2.2 percent as a gauge of banks retreated to a six-week low. Banco Santander SA, Spain’s largest lender, dropped 2.8 percent and Italy’s UniCredit SpA slid 3.5 percent. Wereldhave NV sank 15 percent, the most since 1989, after the Dutch real-estate company cut the value of property in the U.S. and U.K.

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