By Anna Rascouet March 5 (Bloomberg) -- German bunds slipped as factory orders surged in January and before a report that may show U.S. job losses last month accelerated. Two-year notes also fell. The 10-year security, Europe’s benchmark, was set for its third weekly decline in the past four weeks as concern eased that the Greek government would be unable to finance its budget deficit, the biggest in the European Union. Greece’s 5 billion euros ($6.8 billion) of new 10-year bonds rose on their first day of trading, EFG Eurobank Trading prices showed. The European Central Bank extended some stimulus measures yesterday to underpin economic revival. “There’s been a Greek fiscal package that seems to have gained the approval of the institutions that matter,” said Sean Maloney, a fixed-income strategist at Nomura International Plc in London. “And we had stronger than expected German orders data, which is taking bunds a leg lower, but I don’t expect more of a move before U.S. payrolls.” The yield on the 10-year bond rose 2 basis points to 3.14 percent as of 12:24 p.m. in London. The yield fell a week ago to 3.09 percent, the lowest since Oct. 2. The 3.25 security due January 2020 slipped 0.12, or 1.2 euros per 1,000-euro face amount, to 100.92. The yield on the two-year note also increased 2 basis points, to 1 percent. Gains Yesterday The bund rose yesterday for the first day in four as the ECB said it will keep offering banks unlimited funds at a fixed rate for maturities of seven days and one month until at least Oct. 12. It also kept its key interest rate at a record low of 1 percent. Severe weather in the U.S. forced some employers to close temporarily, which may have pushed the unemployment rate up to 9.8 percent from 9.7 percent, according to the median of 80 estimates in a Bloomberg survey. Chancellor Angela Merkel’s government aims to cut record net borrowing this year as the outlook for unemployment and tax revenue improves. Lawmakers agreed to target net new borrowing at 80.2 billion euros, 5.6 billion euros less than planned, according to Green Party budget expert Alexander Bonde. ‘Courageous Step’ Merkel called the Greek government’s announcement of additional budget-deficit cuts a “courageous step” that’s already yielding results. The Greek 6.25 percent bond due 2020 rose to about 99.4 cents on the euro to yield 6.32 percent, compared to an issue price of 98.94 cents, according to EFG Eurobank Trading prices on Bloomberg. The two-year Greek note climbed for a sixth day, the longest streak of gains since November, based on generic yields. The gains pushed the yield down 28 basis points to 5.12 percent. ECB President Jean-Claude Trichet yesterday said it would be “absurd” for Greece to leave the euro. The new 10-year securities were at 98.95 cents on the euro to yield 6.4 percent, compared with an issue price of 98.94 cents yesterday, Matrix prices showed. Demand for the bond exceeded 16 billion euros, said Petros Christodoulou, who heads the Greek debt office. “It is certainly a very positive sign that Greece is still able to borrow on the market on its own, without explicit guarantees,” Marcel Bross, a fixed-income strategist at Commerzbank AG in Frankfurt, wrote in a note to clients today. ‘Convinced the ECB’ Prime Minister George Papandreou announced higher tobacco, alcohol and sales taxes and civil servant salary cuts two days ago to help reduce Greece’s 12.7 percent deficit by 4 percentage points this year. Papandreou is preparing to meet Germany’s Angela Merkel today and French President Nicolas Sarkozy on March 7 to discuss Greece’s finances. “As you can see from the success of the bond issue, the Greek measures have convinced the ECB, the commission and the markets,” Mario Draghi, chairman of Italy’s central bank and head of the financial stability board and ECB governing council member, told reporters at a conference today in Rome. “They are serious measures.” Greek bonds lost investors 1.35 percent this year, according to Bloomberg/EFFAS indexes. This compares with a 2.29 percent gain for German bonds, the indexes show. --With assistance from Anchalee Worrachate and John Glover in London, Flavia Krause-Jackson and Flavia Rotondi in Rome. Editors: Daniel Tilles, David Clarke To contact the reporter on this story: Anna Rascouet in London at arascouet@bloomberg.net To contact the editor responsible for this story: Daniel Tilles in London at dtilles@bloomberg.net

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