Bund volatile, G20 pledges offset slump fears

LONDON: The German Bund future was little changed in volatile early trade on Friday as investors weighed fears over a global recession against pledges by the Group of 20 economies to preserve financial stability.

European stock futures pointed to slight gains for equities after the world's major economies on Thursday pledged to prevent Europe's debt crisis from undermining banks and financial markets, and said the euro zone's rescue fund could be bolstered. .

The German Bund future was virtually unchanged on the day at 138.56 after hovering either side of that figure.

A trader said he expected fears of a global economic recession and an ongoing debt crisis in the euro zone to keep demand for Bunds high.

Weak data from China and the euro zone on Thursday added to a gloomy economic picture painted by the US Federal Reserve which on Wednesday flagged significant risks to the world's largest economy.

"It's just more talk," said one trader referring to the G20 comments.

Greece still had to secure its next bailout aid tranche, without which it may run out of money in weeks and face an imminent default, he noted.

A situation in which Greece cannot pay back its public debt can no longer be ruled out, European Central Bank Governing Council member Klaas Knot was quoted as saying on Friday. .

"I think probably as important was the ECB tone overnight," the trader added.

ECB Vice-President Vitor Constancio said on Thursday the bank's bond-purchase programme would create inflationary pressures if it were sustained.

Copyright Reuters, 2011