LONDON: German government bonds opened lower on Thursday ahead of debt auctions from Spain and France and with hopes that the IMF could increase its resources to help countries with the fallout from the euro zone debt crisis boosting riskier assets.
Bunds however, remained broadly supported near record highs with Greek debt talks, critical to avoid a disorderly default, dragging on.
"Bunds trade as if the market is short of decent quality assets," a trader said.
"Therefore any blow up and they are susceptible to quite a decent squeeze even at these levels.
March Bund futures were 31 ticks lower at 139.56 with benchmark 10-year yields 2 basis points higher at 1.809 percent.
Spain sells up to 4.5 billion euros of 2016, 2019 and 2022 government bonds with the auction expected to go well supported by domestic bidders.
After almost doubling the size of its sale last week in the face of strong demand, Spain will be almost 20 percent funded for the year if it sells the full amount on Thursday.
France sells 2- 3- and 4-year bonds and inflation linked paper worth up to 9.5 billion euros and again the sale is expected to go well with demand for shorter-dated bonds particularly strong in January as the paper can be used as collateral in the European Central Bank's next 3-year financing operation.
For both countries it is the first test of longer-term debt markets since Standard & Poor's cut their credit ratings last week.
The IMF is seeking to more than double its war chest by raising $600 billion in new resources.
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