LONDON: German Bunds extended losses on Thursday one day after a disappointing bond sale sparked fears the debt crisis was taking a toll on the euro zone's power house, but cheaper bond prices could lure investors back into the perceived safe-haven asset.
Market participants would keep an eye on a meeting of leaders from France, Germany and Italy in Strasbourg, where they are due to discuss new Italian Prime Minister Mario Monti's planned reforms, as well as the bloc's overall strategy for dealing with the crisis.
Ten-year German government bond yields hit their highest level in nearly a month at 2.12 percent in early trade and one trader said they would be looking to buy when yields reached 2.15 percent.
"I still think Bunds go up when it all goes wrong. There's going to be more market stress before Bunds can sell off aggressively I think," the trader said.
The German Bund future extended the previous day's losses, falling 66 ticks to 135.15. On Wednesday, it slumped 144 ticks as the German debt agency could not find buyers for almost half of its 6 billion euro bond sale.
Trade was expected to be thinner than usual, with the US Treasury market closed for Thanksgiving holiday.