LONDON: German Bunds were little changed at Thursday's open with investor focus on an Italian sale of five and 10-year bonds after a volatile week for debt issued by the region's lower-rated states.
Bund futures opened 2 ticks higher at 137.88, holding onto gains of more than half a point made in the previous session when weaker data cooled the surging optimism about the health of the US economy.
Italy will face the final, and toughest, of the week's three debt sales later in the session when it sells five- and 10-year bonds and launches a new floating rate note.
Results for Italy so far this week have been mixed with Wednesday's strong six-month bill sale calming nerves after an inflation-linked issue was not well received by secondary markets on Tuesday.
"The Italian sale will be interesting given some of the results this week have been a bit sloppy," a trader said, adding that Italy's yields were likely to rise in trade ahead of the auction as dealers tried to cheapen up the bonds.
Nevertheless, the long-term bond auctions were expected to go through smoothly, supported by the domestic banks that loaded up with long-term ECB cash in December and February.
The strength of demand should give an indication of how much of that cash is still to be invested and whether banks are prepared to do so in longer-maturity debt.
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