LONDON: German Bund futures nudged up on Tuesday with Italian government debt set to remain under pressure on concerns debt-laden Italy may be dragged further into the sovereign debt crisis as Prime Minister Silvio Berlusconi fights to retain his leadership.
Italian government bond yields soared to 14-years highs the previous session with investors spooked by deepening political divisions in the euro zone's third largest economy before a key parliamentary vote on budget reforms later on Tuesday.
The centre-left opposition has said it is preparing a motion of no-confidence that would bring the government down even if Berlusconi survived the vote.
"This vote in Italy is probably the main focus...People have been selling (Italian) BTPs a bit. People are trying to stay fairly light given the volatility," a trader said.
The Bund future was last 11 ticks up at 138.01 compared with 137.91 at Monday's settlement while BTP futures were 58 ticks lower at 92.76 with slim volumes making for big swings in early price levels.
Copyright Reuters, 2010