LONDON: German Bund futures stayed close to three-week lows on Monday as expectations that the European Central Bank could be preparing bold measures to reduce high Italian and Spanish borrowing costs boosted appetite for riskier assets.
ECB President Mario Draghi said last week the central bank would do whatever it takes to preserve the euro, a message echoed by German Chancellor Angela Merkel and French President Francois Hollande.
Those statements increased expectations the ECB may resume its bond-buying programme and potentially ease monetary policy further at its Thursday meeting.
"The meeting will probably be the final scheduled gathering of Euro policymakers, either central bankers or politicians, until September and could therefore be pivotal to how peripheral bonds perform over the coming weeks," Credit Agricole rate strategist Orlando Green said.
At 0604 GMT, Bund futures were flat at 143.21, close to three-week lows of 142.64 hit on Friday.
The comments from euro zone policymakers provide a more favorable backdrop for Italy's sale of up to 5.5 billion euros in three-to-10-year bonds later in the day.
Belgium also plans to sell between 2.0 billion and 3.5 billion euros of five-, 10- and 15-year benchmark bonds.
US Treasury Secretary Timothy Geithner will travel to Germany to meet Merkel and the ECB's Draghi on Monday.
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