Euro-area government bonds rose after European Central Bank Executive Board member Peter Praet said policy makers would "forcefully react" to defend their inflation objective.

Italian securities led gains across the region as Mr Praet said in a speech in Geneva the ECB will “certainly do what’s necessary”.

Since the ECB started its €1.1-trillion asset-purchase program in March, inflation in the currency region has slowed to a near standstill. It remains far less than the ECB’s goal of just below 2 per cent, with consumer prices rising 0.1 per cent in August from a year earlier.

Italy’s 10-year bond yield fell three basis points, or 0.03 percentage point, to 1.78 per cent at 8.44am London time. The 1.5 per cent security due in June 2025 rose 0.23, or €2.30 per €1,000 face amount, to 97.59. The yield on similar-maturity Spanish bonds declined one basis point to 1.99 per cent. Benchmark German 10-year bund yields slipped two basis points to 0.66 per cent.

Bloomberg