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 LONDON: German Bunds fell on Thursday as investors had more appetite for riskier assets after global central banks moved to ease dollar funding strains for banks, but relief is seen limited as the euro zone sovereign debt crisis remains unsolved.

The US Federal Reserve, the European Central Bank and the central banks of Canada, Britain, Japan and Switzerland said on Wednesday they had agreed to lower the cost of existing dollar swap lines by 50 basis points from December 5.

Analysts say the move is only addressing a symptom of the problem, rather than the cause. If policymakers fail to come up with measures to address sovereign funding strains as well at key top level European meetings scheduled in the next 10 days, sentiment can quickly turn around.

"While the central banks' move was greeted with a typical 'risk on' reaction, we see a risk that the 'hurray crowd' will get disappointed rather sooner than later," said David Schnautz, rate strategist at Commerzbank.

"Market expectations about the upcoming policymaker meetings may well run already high, with the risk of under-delivery increasing."

At 0707 GMT, Bund futures were 13 ticks lower on the day at 133.69. European stocks were expected to rise.

Bunds tried to break below 133.00 three times since mid-August but failed to do so on a closing basis. Their next target below 133.00 is 132.05, the 38.2 percent Fibonacci retracement of the April to November rally, according to Clive Lambert, technical analyst at Futurestechs.

As no solution to the crisis was in sight, borrowing costs for Spain are likely to be among the highest it has faced since 1997 at an auction on Thursday of up to 3.75 billion euros of bonds

France also offers bonds worth up to 4.5 billion euros later in the day. The auction is expected to go smoothly as the size of the issue is considered relatively small and the country's debt has outperformed other triple-A rated paper this week on the back of improved risk appetite.

Copyright Reuters, 2011