By Lukanyo Mnyanda Nov. 17 (Bloomberg) -- German government bonds were little changed, leaving the 10-year yield within two basis points of the lowest level in a week, as stock markets declined around the world amid speculation the global economic recovery may stall. The securities advanced earlier after Federal Reserve Chairman Ben S. Bernanke said yesterday economic “headwinds” of reduced bank lending and a weak labor market may restrain the recovery and justify prolonged record-low borrowing costs. Ireland sold 1 billion euros ($1.49 billion) of 2014 and 2019 securities in its last scheduled sale of the year. “There isn’t much holding back bonds at the moment,” said Orlando Green, a fixed-income strategist in London at Calyon, the investment-banking arm of Credit Agricole SA. “The long duration auctions are out of the way in terms of supply and that’s freed up the fears of indigestion.” The yield on the bund held at 3.32 percent as of 12:34 a.m. in London, after earlier dropping to 3.30 percent, the lowest level since Nov. 10. The 3.25 percent security due January 2020 fell 0.02, or 20 euro cents per 1,000-euro face amount, to 99.38. The MSCI World Index slipped 0.5 percent, snapping two days of gains. Bernanke, speaking in New York, repeated the central bank’s Nov. 4 pledge to keep rates low for an “extended period,” and said he anticipated “moderate” growth next year. It’s unclear whether the global economic recovery is self- sustaining as rising joblessness casts a “long shadow” over the outlook for growth, European Central Bank council member Erkki Liikanen said yesterday. Greek Bonds Bonds rose yesterday after a European Union statistics office report showed consumer prices in the euro region fell 0.1 percent in October from a year earlier, prompting speculation the region’s central bank will keep the refinancing rate at a record low even after the 16-nation economy returned to growth in the third quarter. Greek bonds snapped three days of losses, with the yield falling 7 basis points to 4.79 percent, after rising yesterday to the highest level since July. The securities yielded 147 basis points more than the same maturity bund, from 154 basis points yesterday. The yield on the Greek notes increased 20 basis points in the three days through yesterday as the nation’s deteriorating finances deterred investors from owning the government’s debt. Greece’s central bank said yesterday it had advised a number of commercial banks to be more “prudent” in participating in the ECB’s 12-month liquidity offerings in December. Investors bid for 7.9 times the 2014 debt offered by Ireland, while the so-called bid-to-cover ratio for the 2019 securities was 2.5 times, the National Treasury Management Agency said today. The yield spread between 10-year Irish bonds and the bund narrowed 11 basis points to 137 basis points, after rising yesterday to the widest since Oct. 20. German bonds returned 2.2 percent since June 30, compared with a 2.6 percent gain for U.S. Treasuries, according to Merrill Lynch & Co. indexes. Irish bonds returned 6.6 percent in the same period. To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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