LONDON: German Bund futures eased on Monday as Greek opinion polls offered signs the country may be able to form a pro-bailout government, but underlying uncertainty over the country's euro zone future was likely to prevent a steep selloff.
Surveys published on Saturday showed Greece's conservatives have regained an opinion poll lead that would allow the formation of a government committed to keeping the country in the euro zone.
Bund futures fell 25 ticks at the open to 143.98. Despite the slip, the price of German debt futures remains near the record high of 144.55, underpinned by doubts over Greece and concerns about the health of the Spanish banking sector.
"The market has picked up on the pro-bailout Greek polls. That's the driver now but I think there's enough bad Spanish news out there to make me wonder if we're looking at the wrong thing at the moment," a trader said.
A Spanish government source said the country may recapitalise its fourth-largest lender Bankia, which last week asked for a 19 billion euro bailout, with government debt that would allow it to access ECB funding.
The plan could bump up to Spain's national debt, adding pressure to public finances already strained by stifling austerity and weak growth. On Friday, the country's wealthiest autonomous region said it needed government help to plug a funding gap.
An Italian sale of inflation-linked and zero-coupon bonds was expected to go smoothly, in large part thanks to the support of domestic bank buying.
A US public holiday was expected to limit trading activity.
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