Euro zone bond yields edge up after strong survey data
Updates at 1501 GMT
By Harry Robertson
LONDON, Aug 22 (Reuters) -Euro zone bond yields were higher on Thursday after survey data showed the bloc's services sector fared better than expected in August, although a separate measure of wage pressures eased.
Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone, was last up 4 basis points at 2.243%, within its trading range since recovering from a drop at the start of August. Yields move inversely to prices.
Purchasing managers' index (PMI) survey data showed euro zone business activity was surprisingly strong in August, with services a bright spot.
Germany remained mired in a downturn, however; its PMI showed business activity contracted in August for a second consecutive month and by more than expected.
Separate figures showed growth in negotiated wages in the euro zone slowed sharply to 3.55% year-on-year in the second quarter, down from a record high of 4.74% in the first quarter.
"The PMI figures are overshadowing these wage numbers," said Jussi Hiljanen, head of European rates strategy at SEB. "The service sector is still strong and service sector inflation is one of the focal points of the ECB (European Central Bank)."
However, Hiljanen said he was surprised by the pick-up in yields after the PMI data, which was skewed by the Olympics in France.
Italy's 10-year yield IT10YT=RR was up 3.5 bps at 3.605%, and the gap between Italian and German bond yields DE10IT10=RR stood at 136 bps.
Germany's two-year bond yield DE2YT=RR, which is more sensitive to ECB rate expectations, was up 3 bps at 2.402%.
Money market pricing showed traders on Thursday were expecting 65 bps of further ECB rate cuts this year, little changed from the day before.
Bond yields tumbled at the start of August after data showed the U.S. unemployment rate unexpectedly rose in July, raising concerns about the world's biggest economy.
They have since perked back up as data has suggested the economy remains solid, although U.S. yields closed lower overnight after the release of data showing jobs growth in the country was weaker than previously thought.
The number of Americans filing new applications for unemployment benefits ticked up in the latest week, but appeared to be steadying near a level consistent with a gradual cooling of the labor market, data showed on Thursday.
Euro zone negotiated wage growth dips from record high https://reut.rs/49mxSOX
Reporting by Harry Robertson; Editing by Bernadette Baum, Toby Chopra and Jonathan Oatis
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