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EURO GOVT-Bunds slip but Spain doubts contain move

LONDON | Tue Oct 9, 2012 2:12am EDT

LONDON Oct 9 (Reuters) - German government bond prices slipped on Tuesday but did not stray far, supported by uncertainty over when Spain may ask for a bailout after euro zone ministers said the country did not need one yet.

Riskier assets were underpinned by global central bank action and European shares were set to open higher - taking the shine off Bunds - after China's central bank became the latest to take additional stimulus measures to support growth .

Euro zone ministers said Spain was taking steps to overhaul its economy and was funding itself successfully in financial markets, dashing hopes for a speedy resolution to the debt problems of the euro zone's fourth largest economy.

Nonetheless, investors expect that Madrid will ultimately have little choice but to ask for aid.

"At 10-year yields comfortably below 6 percent, the Spanish government remains loath to compromise on conditions, hoping that a rating affirmation by Moody's this month will buy more time," Commerzbank strategists said in a note.

German Bund futures were 21 ticks lower at 141.18.

The Netherlands will kick off the week's issuance, selling up to 2.5 billion euros of 5-year bonds.

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