Bunds fall as US-led equity rally hits demand

LONDON: German Bund futures fell on Monday, extending an after-hours decline seen late last week after US economic data signalled enough improvement to push investors into higher-yielding, riskier assets.

The Bund future opened 53 ticks lower at 141.48, slightly lower than levels seen after the European settlement on Friday.

On Friday, US Treasury prices tumbled after labour market and manufacturing data showed the country's economic recovery remained on track, helping Wall Street stocks rally to five-year highs.

That momentum was expected to keep the low-risk Bunds under pressure but there could eventually be some respite driven by signs of brewing problems in Spain, where Prime Minister Mariano Rajoy was facing calls to resign, and Italy where a banking fraud investigation was reaching a key stage.

"We're lower today after Treasuries closed badly on Friday but I'm not convinced the news flow in Europe is that negative for Bunds," a trader said.

"All this Spanish and Italian news, people have got to start taking it a bit more seriously because they've been largely ignoring up till now."