Germany pays highest borrowing costs for 2 years

Germany paid its highest interest rate in two years at a 30-year bond auction on Wednesday, with demand lower as the country's safe-haven status wanes amid a gradual eurozone recovery.

The average yield for the 30-year Bund was 2.64 percent, against 2.47 in the last such quarterly issue on July 31, according to figures released by the Bundesbank.

"This is the highest rate since October 2011, when it reached 2.82 percent," said a spokesman for the financial agency.

Germany sold 1.665 billion euros' ($2.29 billion) worth of the bonds, and kept 335 million euros in bonds for its own operations.

Annalisa Piazza, economist at Newedge Strategy, said demand for the so-called ultra-long bonds, which are traded less than more-liquid short-term bonds, was not "exceptionally strong".

Germany, the eurozone's biggest economy, has enjoyed very low borrowing costs while many European partners struggled with recession and deficits and investors turned to German bonds as a secure investment.

But as economic prospects have brightened for the region in recent months, interest rates for German debt have gone up, including on the secondary market, where already-issued bonds are traded.

The low rates for its debt have allowed Germany to significantly cut its interest costs in recent years, improving its public finances and bringing it closer to its target of a balanced federal budget, which it expects to reach by 2015.