LONDON: German Bund futures pushed higher on Tuesday on ebbing hopes of a quick solution to the euro zone debt crisis and after Moody's warned on France's triple-A credit rating.
Bunds extended the previous session's gains with European equities expected to open lower after disappointing US corporate earnings and news that China's economic growth slowed for a second quarter.
French government bonds could come under pressure after Moody's warned late on Monday it may place France's top-notch rating on negative outlook in the next three months if the costs for helping to bail out banks and indebted euro zone states stretch its budget too much.
German Bunds snapped three weeks of losses the previous session after German officials cautioned against hopes of a quick solution to the region's two-year debt problems.
"The nervousness is very high and negative comments will have a larger impact than positive comments. The balance of risk is we're definitely going to see more positive performance in Bunds," Nordea analyst Niels From said.
The Bund future was last 28 ticks up at 134.90 compared with 134.62 at Monday's settlement close. Cash 10-year Bunds yielded 2.07 percent, 2.3 basis points less than in late Monday trade, retreating from seven-week highs above 2.20 percent hit last week on market optimism was high that European summit next week would unveil a comprehensive solution to the debt crisis.