German 10-year Bunds were down 0.9 ticks to 115.05, the five-year Bobl was down 2.5 ticks to 109.145 points and the two-year Schatz was down 1.5 ticks to 103.850.

Strategists from Calyon Capital Markets Research commented on German bond yields, saying the Bund and Schatz will likely continue the trend from a week ago.

"Since the middle of February the German 10-2Y cash curve has been set in a downward trend and tried hard but failed to break it last week. The yield curve played ping pong with risk preference last week and will probably do the same this week," they wrote to clients in a research note.

"However, there is increasing boldness from corporate and financial issuers as the earnings season clears up, and this rising issuance weight could threaten longer maturities."

The September 2008 Euribor was down 0.85 ticks to 95.335 while the December 2008 Euribor was down 1.1 ticks to 95.480.

European Central Bank President Jean-Claude Trichet spoke on Monday in an interview with Sky TV, saying that despite the U.S. slowdown, there was ongoing global economic growth. Earlier, speaking with an Italian news station, Trichet stated that wage moderation was essential, adding that rising wages could hurt job creation.

At the close of the UK trading day on Monday, the 10-year Gilt was down 1.2 ticks to 108.95. September short sterling was down 1.3 ticks to 94.570

In the overnight, numerous components of UK's April producer prices data series rose to record highs on Monday. The Office for National Statistics said producers' input prices rose 2.4% in April from 1.7% in March, well above market forecasts for a 2.0% increase in seasonally adjusted terms. Year-over-year, April input prices rose 23.1%; the highest increase since records began in 1986. It follows a 20.5% rise in March and forecasts for a 21.7% increase.

In addition, the UK's visible trade deficit improved marginally over March, according to figures published by the Office for National Statistics (ONS) on Monday. UK's visible trade balance with the rest of the world was in deficit of £7.437 billion compared with £7.587 billion in February, revised upwards from the previously published figure of £7.5 billion.

All data taken at 1:58 p.m. EDT.

By Ryan Szporer, This email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Gaurav Sharma, This email address is being protected from spam bots, you need Javascript enabled to view it and Todd Wailoo, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it