European government bonds were lower, with longer-dated issues underperforming as they tracked falls in oil prices US crude oil futures fell below 64 usd per barrel as US refineries begin to resume production after the devastation caused by hurricane Katrina, easing concerns that oil prices could spiral ever higher and dampen world economic growth Bond prices have consequently begun the week on the backfoot, with firmer equity markets also adding pressure Developments in oil markets, as well as in the US treasury market, are likely to remain the dominant influence on bonds in the near term, analysts at BNP Paribas said They also noted the influence from Japanese government bonds, which "have proved to be a good leading indicator of reversals on European government bonds so far this year" Japanese issues have fallen sharply in the wake of strong GDP data and the resounding victory in this weekend's election for the ruling LDP party The win will enable Prime Minister Junichiro Koizumi to push through much-needed reforms, boosting demand for Japanese equities Over in the UK meanwhile, gilts tracked their European counterparts lower, with weaker-than-expected UK producer prices data providing only a small and short-lived boost earlier this morning Official figures showed growth in raw material and factory gate prices slowed sharply in August and came in well below analysts' expectations, easing fears about inflationary pressures in the pipeline With higher energy costs still exerting considerable pressure on factory gate prices, however, analysts remain sceptical that the easing in producer price growth will feed through into consumer price inflation