LONDON: German government bonds rose at Friday's open after euro zone finance ministers demanded further measures from Greece before agreeing to a second bailout package crucial to avoid a messy debt default.
Financial markets were heartened on Thursday after Greek political leaders clinched a deal on austerity measures and reforms after weeks of wrangling but the euro zone ministers said more cuts were needed as well as a parliamentary seal of approval.
"It feels like running a software update where the status bar indicates '99 percent done', but then it takes forever to finish," Commerzbank strategists said in a note.
"Until one knows for sure that the system won't crash, short-covering in Bunds by fast money should prevail, with prospects for a deal next week limiting the upside though."
March Bund futures were 40 ticks higher at 137.50 with 10-year yields 2 basis points lower at 2.00 percent after pushing to their highest levels this year at 2.05 percent on Thursday.
"It looks rocky and Greece is going to drag on into next week," a trader said.
"The market wants it to be done, there's a sell-off every time there's a glimmer of hope but I think the pendulum has swung too far in favour of risk-on, although it might be a bit early to make that call."