German bund yields jumped the most in seven months last week as demand for the safest assets ebbed, while bonds from Europe\'s most indebted nations rebounded amid waning concern that Greece will default. Spanish bonds climbed, pushing the ten-year yield down the most in five months. Greece\'s bonds gained for a second week as German banks lined up behind plans to roll over their Greek debt while the Mediterranean nation\'s lawmakers approved a budget-cutting package. Italian ten-year bonds gained for the first week in three as Prime Minister Silvio Berlusconi\'s cabinet passed deficit-cutting measures worth €47 billion (Dh250.76 billion). \"Market fears of a near-term default in Greece faded this week as the Greek government passed the austerity bill, which should pave the way for more funding in the next few weeks,\" said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets in Edinburgh. Article continues below \"Consequently, the flight-to-quality bid for bunds has diminished and peripheral bonds have rallied.\" The ten-year bund yield climbed 21 basis points over the week to 3.04 per cent in London on Friday. That\'s the biggest weekly increase since the five trading days ending August 7, 2009. The 3.25 per cent security due in July 2021 fell 1.805, or €18.05 per €1,000 face amount, to 101.76. Yields on two-year notes advanced 30 basis points to 1.65 per cent, their biggest weekly gain since August 2009. Crucial vote Greek Prime Minister George Papandreou won a vote to implement a €78 billion package of tax increases and asset sales, paving the way for further financial aid. The nation may get as much as €85 billion in new financing, including a contribution from private investors, in a second bailout, according to an Austrian Finance Ministry official. \"Optimism about Greece has pushed bund yields higher,\" said Peter Chatwell, strategist at London\'s Credit Agricole Corporate and Investment Bank. Spain\'s ten-year yield fell 30 basis points to 5.39 per cent. Italy\'s ten-year bond yields dropped ten basis points to 4.87 per cent, while yields on similar-maturity Greek securities fell 46 basis points. German notes may fall further this week as the European Central Bank raises borrowing costs. The ECB will lift its refinancing rate to 1.50 per cent from 1.25 per cent on July 7, according to the median estimate of 38 economists in a Bloomberg survey. ECB President Jean-Claude Trichet reiterated on June 30 that policy makers are in a state of \"strong vigilance\" against inflation, a phrase he has used before previous tightening. The central bank raised its key rate in April by a quarter point to 1.25 per cent, the first increase in almost three years.