LONDON: German Bund futures rose on Thursday, with investors cautious before Spain goes to the market to raise funds as it mulls if and when to seek a bailout that would open the way for European Central Bank intervention.
The pressure is ramping up on the euro zone's fourth largest economy to seek financial help, with borrowing costs over ten years briefly creeping above 6 percent this week.
But Spain remains reluctant to ask for aid which may cause it to lose some fiscal sovereignty and potentially place its economy under further growth-stifling austerity.
Spain will sell three-year and 10-year paper in an auction of up to 4.5 billion euros, potentially the largest amount since early March, according to Reuters data. nL5E8KJC8U]
Yields are expected to fall at the auction, given the ECB-driven improvement in sentiment towards riskier assets, but to remain relatively high. Spain is facing the possibility of losing its investment grade credit rating before month-end as it is currently under review by Moody's Investors Service.
"It's all about supply today. That's the main focus of the day," one trader said. "Spain has cheapened up to a degree so it should go okay. (But) we have got to get through it."
German Bund futures rose 24 ticks to 139.95, with European stocks set to open lower.
France, which in recent months has benefited from a hunt for yield relative to Germany, also sells debt later in the day.
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