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By Virginia Furness
LONDON, April 10 (Reuters) – Investors from eurozone countries were ready for a busy trading day on Wednesday, before a series of key economic data, the ECB's April meeting and a European summit over which Brexit will be discussed.
Bond yields for the bloc as a whole were lower at the start of trade, after the weak economic growth forecasts of the International Monetary Fund and the EU-US. Trade tensions set the tone for Tuesday's session.
Bond yields, which are moving in the opposite direction of prices, have recently fallen as a result of weaker economic forecasts, trade tensions and a more accommodating monetary stance from the world's largest central banks.
The yield on 10-year German government bonds, the benchmark for the region, was recently seen at -0.008%.
Attention is now turning to the meeting of the European Central Bank, as well as to the economic indicators of the bloc as a whole. France has announced an industrial output higher than forecast in February.
Italy and the United Kingdom will also report on their industrial and manufacturing output, followed by US inflation.
The ECB is almost certain to keep the policy on hold, taking the time to badess whether the most recent stimulus is sufficient to stem a rapid decline in investor sentiment.
Expectations for a more accommodating monetary stance favored a strong rally in euro area government bond yields at the time of the ECB's last meeting on 7 March, but there was talk of the interest rate hierarchy that pushed German 10-year bond yields into negative territory for the time being. since 2016 two weeks later.
ADDITIONAL DETAILS
The ECB confirmed in its minutes of March that the issue of prioritization had been discussed and that all details later on Wednesday would be warmly received.
Investors also hope the ECB will provide more details on its plans to grant a new cycle of multi-year cheap loans to banks to support economic growth. These loans have particularly supported the economies of southern Europe, such as Spain and Italy, where the bank participation rate has been high.
But strategists do not expect much advice.
"We are not expecting too much from the ECB today," said Christian Lenk, rate strategist at DZ Bank.
"The announcement regarding TLTRO seems unlikely. The other big topic is prioritization, but I do not expect them to advertise anything about it. They have already adjusted their outlook and we know what monetary policy will look like until the end of the year, "Lenk said.
Peripheral and long-term Eurozone bonds were also helped by the strong yield offer, which reduced Portuguese 10-year bond yields to their lowest level, and Italian 30-year bond yields fell. at 3.43%, its lowest level since July 2018.
European Union leaders will grant a second deadline to Prime Minister Theresa May, but could demand that she accept a much longer extension while France is pushing for conditions to limit Britain's ability to undermine the block. (Report by Virginia Furness edited by David Holmes)
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