LONDON: The German Bund future opened lower on Tuesday as index futures pointed to a higher open in European stock markets but safe-haven debt should remain underpinned by concerns over a possible Greek default.
A downgrade to the ratings of the euro zone bailout fund was widely anticipated. But it serves another blow to the crisis-fighting mechanism at a time when the crisis could deteriorate further, should a deadlock over Greek debt swap negotiations not be overcome.
Spain and Belgium's sales of treasury bills were expected to attract demand against a backdrop of ample European Central Bank liquidity in the financial system.
"They should go alright in the current environment," a trader said, but he added that the Spanish one could not necessarily be seen as a precursor to Thursday's bond sale.
"It's only a matter of time before periphery goes wrong again."
The German Bund future fell 29 ticks to 139.57. European stock index futures pointed to a higher open on Tuesday as Chinese growth data was slightly better than expected.
After Greece's talks with creditors broke down on Friday, the country is under growing pressure to secure a last-ditch agreement with its private creditors to accept voluntary losses on their holdings of Greek bonds.
Later in the week, Spain will face a tougher test of investor appetite when it issues bonds with maturities longer than the ECB loans that eased the way for Spain and Italy to issue shorter-dated paper last week.
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