LONDON: German Bunds opened broadly flat on Tuesday as markets continued to fret over the risk of sovereign credit rating downgrades across the euro zone after steps towards fiscal integration failed to ease the debt crisis in the short term.
Bund futures consolidated recent gains, rising 5 ticks to 136.59 after rallying strongly the previous session. Globally, riskier assets continued to suffer on the threat that rating agency Standard and Poor's could act on its warning over the region's debt ratings.
Measures to strengthen budget discipline agreed at a European Union summit last week were not seen as sufficient to ease the immediate market worries over sovereign debt -- something only a huge financial backstop provided by the European Central Bank was likely to achieve.
"People are picking holes in the summit... it hasn't done anything major and we're looking out for some sort of ratings action sooner rather than later," a trader said
He added peripheral debt was likely to remain under pressure in the near term but reluctance to trade into the year-end and perisistent ECB bond-buying intervention could delay any major selloff.
A survey of German analysts and investors was expected to show worsening sentiment in the euro zone with its index seen falling to -56.5 in December from November's reading of -55.2.
Technical charts showed a break above Friday's high of 137.12 would open the door for fresh rises, possibly testing the 139.58 high set in mid-November, said Futurestechs analyst Clive Lambert.
Later in the day, the region's European Financial Stability Facility (EFSF) bailout fund will sell three-month bills at its first sale in a programme of short-term debt issuance designed to increase funding flexibility.
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