June 27 (Reuters) - German 30-year government bond yields were on track for their biggest weekly increase in nearly four months after rising this week on expectations of increased borrowing by Germany's government.
German lawmakers on Thursday passed a multi-billion-euro package of fiscal relief measures to boost investment, part of the new government's plans to put Europe's largest economy back on track for growth.
Markets are pricing in increased bond supply from Germany to fund such plans, which is expected to push longer-dated bond yields higher.
German 30-year government bond yields DE30YT=RR have risen nearly 10 basis points this week, heading for their biggest weekly gain since March 3. They were marginally higher on the day at 3.094%, after hitting their highest level since May 26 at 3.111% on Thursday.
The 10-year yield DE30YT=RR was up 1 bp at 2.575%, while the 2-year yield DE2YT=RR – more sensitive to ECB policy rates expectations - was up 2 bps at 1.84%, recouping most of the fall in the previous session.
On Wednesday, NATO leaders agreed to hike spending on defence to 5% of GDP, but some European nations, burdened by already large deficits, may struggle to meet the target.
Italy's 10-year bond yield IT10YT=RR was flat at 3.495%.