LONDON: German Bund futures inched lower at the open on Monday, extending falls from late Friday trade after results of an external audit of the capital needs of Spain's ailing banks came in line with market expectations.
The independent audit of Spanish banks showed a 59.3 billion euro capital shortfall in the event of a serious economic downturn.
Markets were expecting a 60 billion euro shortfall and the result was welcomed by the European Central Bank - which is on standby to buy the bonds of struggling sovereign issuers provided they ask for aid - the IMF and the European Commission.
Traders, however, said the relief for Spanish bonds was likely to be short-lived on uncertainty over when Madrid would seek aid to activate the ECB scheme.
"Bunds are down in line with late Friday trading after the stress test results but nothing much has changed," a trader said. "I don't think there are any signs of (Spain) imminently about to request (aid), therefore Spanish bonds will probably remain under pressure."
Investors were also on edge as they waited for a review by credit rating agency Moody's, which currently has Spain one notch above junk with a negative outlook.
The Bund future was last 13 ticks down at 141.64 compared with 141.77 at Friday's settlement.
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