Germany’s government bonds extended an advance this week, that pushed yields to record lows as investors rushed to compete with demand from the European Central Bank’s debt-purchase programme.

THE European Central Bank spent a record amount on government bonds last week as it began buying Italian and Spanish securities to contain the debt crisis.

EUROZONE interest rate futures are still pricing in a quarter point cut in European Central Bank (ECB) rates by September, with dealers undeterred by an apparent change of tone from the ECB chief.

European government bonds were up in early London trade following the release of a weaker-than-expected German business climate Ifo index for December, dealers said.