German bonds creep up on stocks, Greece

LONDON: German bonds edged higher at the open on Tuesday, underpinned by losses in global stock markets overnight, concerns about the health of the global economy and uncertainty over a resolution to the Greek debt crisis.

Most Asian stock markets fell, the S&P had its lowest close since mid-March, and European stocks saw an 11-week closing low in the previous session as recent downbeat data raised doubts about the sustainability of the global recovery.

The June Bund future was 8 ticks firmer at the open at 125.52, with uncertainties over Greece also likely to provide the bond market with underlying support.

Even though Greece looked closer to getting additional aid to prevent a default, broader questions remained and talk of restructuring had not yet gone away.

Questions about the composition of the bailout and how much private investors will be involved should underpin the market to some degree, a London trader said.

"There is a lot of noise around peripherals," he added.

A restructuring of Greece's public debt, which many analysts say is inevitable, is inappropriate as long as the country follows through on promised reforms, European Central Bank chief Jean-Claude Trichet said on Monday.

Trade should remain range-bound however ahead of a speech by Federal Reserve Chairman Ben Bernanke later in the session, the trader said. Investors would also refrain from placing any big bets only days before the European Central Bank's monetary policy meeting.

Copyright Reuters, 2011