Bond yields across several countries in euroland tumbled Friday off the back of return-hungry investor interest in non-German bond markets.  Falling to their lowest point since September 2010, the French ten-year yields lead the field in terms of decline.

The attractive high-yields offered by France, Spain and other indebted euro zone nations weighed heavily on German Bunds, pushing yields further from the lows hit midway through the previous day’s trading. "In the absence of bad news there's a bit of a hunt for yield. Bunds are at such a low level I think there's some strategic reallocations going on," said Rabobank strategist Lyn Graham-Taylor.

Spanish and Italian bond yields have also dropped through the floor, with Italian 10-year yields falling 12 bps to 5.60 percent and Spanish yields down 11 bps at 6.07 percent. While Belgian yields shed 6.4 bps to 3.14 percent and the Austrian equivalent gave up 6.3 bps to 2.23 percent, extending the previous day's trend.

“No clear trigger”, say top forex brokers

The retreat to non-German markets has provoked confusion from some quarters, with some analysts suggesting that there was no clear trigger for the move into other sovereigns. The likelihood is, some brokers suggest, that concerns over the general health of the currency bloc – with Greece’s uncertain future and Spain’s struggling banking sector as top priorities – could result in a reversal in the forex markets.

"This is all built on very shaky ground, and we could easily see things reversing again," said DZ Bank strategist Michael Leister. "The market is trading political headlines which means, in turn, the market will remain very volatile for the time being."

Despite the allure of the higher yields offered by debt-crippled euro zone nations, analysts are not convinced that the safe-haven status of the German Bund will lose its appeal anytime soon. Amid the turmoil and Greece’s uncertain position in the currency bloc – a retreat from a safe space to stash cash is unlikely given the nervous market sentiment.

Bankia in suspense

Bankia have suspended trading in its shares, following reports that the Spanish lender will ask the government for an additional E15bn bailout and presents a restructuring plan.

Stock market regulator CMV this morning reported that the suspension was owing to “circumstances that may affect the normal share trading". The shares closed down 7.4 percent yesterday. The proposed new management team have reportedly set a lower valuation for the bank’s parent company BFA, according to Expansion newspapers; a move which is unlikely to go down well with the bank’s 400, 000 shareholders.

Bankia was part-nationalised earlier this month and, according to live charts, June Bunds are now down 18 ticks at 143.79, having bounced off 143.63.

The current economic turmoil in Spain is unlikely to be aided by Bankia’s bid for state aid – with investor fear continuing to fuel the euro’s prolonged downward trajectory. “The euro remains firmly in a downtrend, investors continue to pile into German bunds that are returning them next to nothing and Spain’s economy is continuing to be crippled by rising borrowing costs and more bank bailouts”, Simon Denham of Capital Spreads told this site. “The recipe is a toxic one that shows just how serious the European crisis is becoming and now that we’ve had the big shake out in equities, it would seem that for now at least the selling has been exhausted.”

Oh yes, after the week we’ve just had, we know that feeling!

Sarah Cox, Staff Writer