By Matthew Brown Nov. 11 (Bloomberg) -- European government bonds declined as Germany auctioned 5 billion euros ($7.5 billion) of 10-year bunds and stocks rose, eroding demand for the safest assets. The drop pushed the yield on the benchmark bund up from within 3 basis points of the lowest level in more than a week as the MSCI World Index of shares gained 0.6 percent. Credit Agricole SA, France’s third-largest bank, posted better-than- forecast earnings and China reported rising industrial production in October. Demand was 1.4 times greater than the amount supplied at the German auction, compared with an average of 1.6 at the previous three sales of 10-year securities. “Equities have taken a bounce and bunds are reversing some of the gains that we have seen over the last few sessions,” said John Davies, a fixed-income strategist in London at WestLB AG. The yield on the new benchmark 10-year note rose 4 basis points to 3.38 percent as of 10:15 a.m. in London. The 3.5 percent security due in January 2020 fell 0.35, or 3.5 euros per 1,000-euro face amount, to 98.91. Germany plans to sell a record 329 billion euros of bonds and bills this year, up from 220 billion euros in 2008, as it seeks to fund stimulus programs to help drag its economy out of recession. Europe’s largest economy exited recession in the second quarter along with France, while the euro-region is expected to post third-quarter growth in a report due Nov. 13. German government bonds have lost investors 0.01 percent since the beginning of October, compared with a 0.3 percent loss for U.S. Treasuries and 1.3 percent for U.K. gilts, according to Merrill Lynch & Co. indexes. To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net

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