German 10-year yields inch lower as markets watch regional politics

By Sophie Kiderlin

LONDON, Feb 10 (Reuters) - Euro zone bond yields were broadly steady on Tuesday as investors weighed the potential impact of political shifts, including Japan's election and questions over UK Prime Minister Keir Starmer's future, on European debt markets.

The German 10-year yield, which serves as the benchmark for the euro zone, was last around two basis points lower at 2.8218%. DE10YT=RR

Following Japan's election on Sunday, markets began the week working through the potential impact of the historic win for the Liberal Democratic Party, which increased the chances of Prime Minister Sanae Takaichi proceeding with stimulus measures. Japanese bond yields were last broadly steady.

Elsewhere, tensions over the UK's leadership eased on Tuesday following heavy criticism of Starmer due to his pick of Peter Mandelson as U.S. ambassador. Mandelson was forced to resign over links to the late U.S. sex offender Jeffrey Epstein.

Two key aides have also resigned in recent days, and Starmer on Monday faced calls to resign from his own party's leader in Scotland. Starmer did receive some support from other senior party figures, but UK assets came under pressure.

The yield on the British 10-year gilt was last down by close to 3 bps after having risen on Monday. GB10YT=RR

In a quiet week on the data front in the euro zone, attention will also focus on U.S. economic data, including the January employment report, consumer inflation and retail sales figures. The data could shift market expectations for the Federal Reserve's interest rate policy.

Markets further contended with tech giant Alphabet tapping into the U.S. high-grade bond market on Monday, contributing to a surge of debt funding by AI companies. According to International Financing Review data, Alphabet sold $20 billion in a seven-part series of senior unsecured notes.