EURO GOVT-Bund slip as investors book profits

* Bund futures slip, traders cite stops, profit taking

* Pressure to resume on euro zone periphery in January

By William James

LONDON, Dec 27 (BestGrowthStock) – German Bund futures fell on
Monday, shedding early gains to lose over half a point in thin
post-holiday trade with investors looking to take profit from
squaring up positions before the end of the year.

Bunds (FGBLc1: ) were last at 124.69 down 46 ticks on the day,
with traded volumes low as London markets remained closed after
the Christmas holiday. Less than 50,000 March futures contracts
had been exchanged by 0900 GMT.

“Some players are coming in and taking this chance to lock
in their profits after a quite decent pre-Christmas rally,” said
Michael Leister, strategist at WestLB in Dusseldorf.

Traders also said stops were triggered in the Bund future,
with selling interest seen around 125 and 124.80 pushing the
contract as low as 124.55.

U.S. Treasury futures (TYv1: ) were also lower after losing
ground in Asian trading ahead of debt supply later in the
session.

Bond markets gained little support from China’s decision to
raise interest rates over the weekend, despite European equity
bourses (.FTEU3: ) falling on concerns over the growth impact of
Chinese fiscal tightening.

Tension surrounding the euro zone’s weaker states remained
high, but there was no obvious escalation after Portugal became
the latest peripheral country to have its credit rating cut late
last week. [ID:nN23149674]

“The market has made its judgment already with regards to
the credit quality of Portugal and Ireland. Over the whole
crisis the rating agencies have been lagging behind what the
market has been pricing in,” Leister added.

A wave of negative credit rating news in December has seen
Irish debt downgraded sharply and fresh warnings of a cut to
Greek, Belgian and Spanish ratings.

With many investors reluctant to take on new positions
before the end of the year analysts said the ratings actions,
along with the resumption of debt sales, could lead to renewed
pressure and yield spread widening in January.
(Editing by Mike Peacock)

EURO GOVT-Bund slip as investors book profits