By Andrew MacAskill Oct. 21 (Bloomberg) -- European government bonds advanced for a fourth day as traders increased bets policy makers will cut interest rates by year-end to revive the faltering economy. The gains pushed yields on 10-year German bunds to the lowest level in more than a week as the odds on the ECB cutting rates by more than a quarter of a point rose to 50 percent. Inflationary pressures in the euro region will ease quicker than forecast, European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo said in an interview with Spain's La Voz de Galicia newspaper today. ``ECB policy makers show there has been an abrupt shift away from inflation to growth concerns, meaning further rate cuts are inevitable,'' said Nick Stamenkovic, a fixed-income strategist in Edinburgh at RIA Capital Markets. ``The performance of the bund market today is quite impressive.'' The yield on the 10-year bund, Europe's benchmark government security, dropped 2 basis points to 3.99 percent by 10:26 a.m. in London. The 4.25 percent security due July 2018 climbed 0.18, or 1.8 euros per 1,000- euro ($1,326) face amount, to 102.06. The yield on the two-year note fell 2 basis points to 2.92 percent. Yields move inversely to bond prices. The difference in yield, or spread, between two- and 10- year German notes was 107 basis points today, up from 92 basis points a week ago, a steepening of the so-called yield curve that indicates investors are increasing bets on further interest-rate reductions. The spread reached 117 basis points on Oct. 16, the most since June 2005. Greece sold 1.5 billion euros of 4.6 percent notes maturing in 2018 at a government auction today, with demand for the securities exceeding the amount offered by 2.95 times. To contact the reporter on this story: Andrew MacAskill in London at amacaskill@bloomberg.net

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