Euro zone government bond yields edge up before PMI

By Stefano Rebaudo

Nov 22 (Reuters) - Euro zone borrowing costs rose slightly on Friday before purchasing managers' surveys (PMI) due later in the session, as geopolitical tension prompted investors to bid for safe-haven government bonds.

Russia fired a hypersonic intermediate-range ballistic missile at the Ukrainian city of Dnipro on Thursday in response to Britain and the United States allowing Kyiv to strike Russian territory with advanced Western weapons, President Vladimir Putin said.

Germany's 10-year yield, the benchmark for the euro area, was up 2 basis points (bps) at 2.33%.

Bond prices move inversely with yields.

Markets priced in a European Central Bank deposit facility rate at around 1.95% by July.

Germany's 2-year yields, more sensitive to expectations for the ECB policy rates, rose 2 bps to 2.11%.

The gap between French and German yields - a gauge of the premium investors' demand to hold France's debt - was at 78 bps after hitting 70.9 bps last week, its tightest since Oct. 31.

French far-right leader Marine Le Pen threatened on Wednesday to topple Prime Minister Michel Barnier's fragile coalition government, slightly widening the French spread.

Italy's 10-year government bond yields, the benchmark for the euro area periphery, rose 2 bps to 3.58%.

The spread between Italian and German yields was at 125 bps after reaching 115.90 on Wednesday, its tightest level since mid-March 2024. Investors expect a possible upgrade by Moody's later on Friday. (Reporting by Stefano Rebaudo; Editing by Nicholas Yong)