LONDON: German Bunds fell on Tuesday as data released at the market open showed the country's gross domestic product grew more than expected in the first quarter but the move was set to be short-lived with political stalemate in Greece supporting the market.
Traders had called for Bunds to open slightly higher but the paper was still expected to set new highs in coming days with Greece facing the liklihood of another round of elections and with fears growing the country may leave the euro zone.
Greek Party leaders are expected to convene at 1100 GMT but there is little hope President Karolos Papoulias's proposal to form a technocrat government would end the deadlock.
And if Greece fails to repay a 436 million euro maturing bond - which was not included in its recent debt restructuring - on Tuesday, sentiment is likely to sour further.
June Bund futures were 14 ticks lower at 143.26, having set new highs of 143.69 the previous day, with 10-year yields 1.5 basis points higher at 1.472 percent, just above all time lows of 1.434 percent.
"Trading is very thin and so we're likely to see new highs but at some point we may have to consolidate the recent gains," a trader said.
"There's been a bit of buying of quality non-euro zone paper such as Gilts and Swedish bonds but some accounts have to stay invested in the euro zone and that's why Bunds are perpetually bid."
German gross domestic product grew a surprise 0.5 percent in the first quarter in seasonally adjusted terms - well ahead of a consensus forecast, as exports helped the economy bounce back from contraction of 0.2 percent in the fourth quarter.
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