LONDON: German government bonds opened higher on Thursday due to worries about global growth driven by a spike in oil prices and doubts that Greece would be able to implement tough austerity measures required under its second bailout deal.
Oil prices rose due to ongoing unrest in Syria and failed talks over Iran's disputed nuclear programme, prompting investors to turn to low-yielding, safer assets such as US Treasuries and Bunds.
The Greek bailout, which includes a deal to impose hefty losses on its private creditors, averts an unruly default next month. But investors fear that Athens may still not be able to keep its debt under control and the risk of a second debt restructuring would resurface.
"A deal was in the price, but implementation risks are high," one trader said. "Also the oil price (is rising) so we're beginning to watch it. The market seems to take it as weighing on growth."
At 0708 GMT, Bund futures were 26 ticks higher on the day at 138.79, while 10-year cash yields were stable at 1.90 percent.
A rally in debt issued by the euro zone's lower-rated states this year seemed to lose momentum in recent days despite a looming European Central Bank injection of large amounts of three-year cash into the banking sector on Feb. 29.
"We need fresh supportive news from periphery to push it on from these levels. After (the cash injection), where's the next good news for periphery," the trader said.
US jobless claims data later in the day may reverse some of the gains caused by weak European PMIs on Wednesday if the recent trend of improved figures continues.
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