As European stocks gained amid optimism trial to curb the regions fiscal catastrophe, German 10-year government bonds declined.

Two-year German notes declined for a second day after European finance ministers said Greece's debt crisis won't lead to a continent-wide austerity drive that may tip the economy back into a recession.

Spain's 10-year bonds declined as the country's borrowing costs rose at a sale of 12-month and 18- month bills. Greek bonds rose as the European Union said it transferred the first installment of emergency loans to the country.

The 10-year German fund yield rose one basis point to 2.87 percent as of 10:03 a. m. in London. The 3 percent security due July 2020 fell 0.13, or 1.3 Euros per $1,000 ($1,241) euro face amount, to 101.13. The two-year note yield rose one basis point to 0.57 percent.

The German 10-year yield reached 2.82 percent yesterday, the lowest since May 7.

"Not everyone will accelerate consolidation in a very uniform way," EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters early today in Brussels.

Only high- deficit countries including Spain and Portugal will be ordered to make additional cuts, while policies will remain untouched in better-off nations such as Germany.

However, German investor's confidence fell in May after Europe's debt crisis deepened, stoking concern about the euro's future and rattling financial markets.