LONDON: German Bunds fell on Wednesday as riskier assets looked more appealing following new monetary stimulus from Japan, but Spain's reluctance to seek a bailout and activate the ECB's new bond-buying plan was seen limiting losses.
The Bank of Japan boosted its asset purchase programme by 10 trillion yen ($127.21 billion) to 80 trillion yen on Wednesday, following the US Federal Reserve's stimulus plan last week, in a bid to boost the chances of an economic recovery.
That was expected to give a bid to European equities and act as a drag on safe-haven assets, such as German Bunds.
Bund futures were 36 ticks lower on the day at 139.10.
"Central banks are still throwing money at things, we ... (expect Bunds to trade) lower simply because stocks are reacting to what's happened in Japan," one trader said.
Bunds have fallen steeply since the European Central Bank pledged to carry out unlimited purchases of bonds issued by troubled euro zone states to ease the bloc's debt crisis.
However, the condition that a country must first request aid from the region's rescue funds is keeping investors edgy and unwilling to sell too much of their German debt holdings.
An auction of up to 5 billion euros worth of two-year German debt later in the day will provide further clues on how nervous markets are about Spain's apparent reluctance to seek help.
"The risk rally has been fading over the past few days so I think (the auction) would be OK without being spectacular," one trader said.
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