FRANKFURT (dpa-AFX) - German sovereign bond prices edged lower on Monday, pressured by rising oil prices. The benchmark Euro-Bund Future fell by 0.16 percent to 125.33 points, while the yield on the 10-year Bund climbed to 3.05 percent.

The situation in the Middle East initially intensified, weighing on market prices. Iran and Israel engaged in direct hostilities for the first time since the April ceasefire brokered between Tehran and Washington. This escalation threatened to derail a potential agreement between Iran and the U.S. However, tensions eased as the day progressed. According to media reports, Israel intends to halt its strikes, following a declaration by Iran's military leadership that its operations against Israel had concluded.

The temporary surge in oil prices reignited inflation expectations. Financial markets widely expect the European Central Bank (ECB) to raise its key interest rates by 25 basis points this Thursday.

Weak economic data from the Eurozone had little impact on the German bond market. German industrial orders fell more sharply in April than economists had anticipated. 'The slump in sentiment indicators, such as the Ifo Business Climate Index, suggests that a recovery is not imminent,' said Commerzbank Chief Economist Jörg Krämer. 'Instead, the German economy is likely to contract slightly in the second quarter. The conflict in the Middle East is taking its toll.'/jsl/jha/