LONDON: German Bund futures opened little changed on Wednesday, with investors reluctant to increase their exposure to safe haven instruments despite fading hopes that an EU summit on Thursday will produce game-changing results.
German Chancellor Angela Merkel squashed hopes for common euro zone bonds - seen by some economists as key to secure the future of the euro - on Tuesday, saying Europe would not share total debt liability for as long as she lived.
But Germany appeared to budge on using the euro zone's rescue funds more flexibly to help banks and possibly remove their preferred creditor status.
At 0606 GMT, Bund futures were 6 ticks lower on the day at 141.64, with 10-year cash yields up 2 basis points at 1.517 percent.
"There's a danger that we're going in thinking that we get absolutely nothing and they may produce something, that's the way we're heading into it now," one trader said.
Tensions in financial markets have increased this week after Spain formally requested up to 100 billion euros in rescue loans to recapitalise its ailing banks. Cyprus quickly followed, saying it may need up to 10 billion euros in emergency funding.
Italy plans to sell up to 9 billion euros of six-month T-bills later in the day, before an auction of up to 5.5 billion euros of 5- and 10-year bonds on Thursday.
A steep rise in Italian yields in recent days should lure enough bids at the auctions, but investors are expected to pay closer attention to the results after a weak Spanish T-bill sale on Tuesday.
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