LONDON: German Bund futures edged higher on Tuesday as investors sought safety before a vote by Cyprus's parliament on controversial legislation that could secure its financial rescue or threaten default.
The parliament is unlikely to pass legislation taxing deposits, government spokesman Christos Stylianides said earlier on Tuesday.
The idea of the levy unsettled financial markets on Monday and sets a dangerous precedent in the euro zone by penalising savers, which analysts fear could spark contagion across the region.
Euro zone ministers urged Cyprus to let smaller savers escape a levy on bank deposits.
"We are just waiting for another headline out of Cyrpus," a trader said, adding that buying Bunds "is the only trade to have on."
"It's quite serious, it's got bigger implications. I think there is (a risk) of some cross border contamination."
German Bunds were up 7 ticks on the day at 144.01.
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