EURO GOVT-Bunds edge up after France downgrade

LONDON Tue Nov 20, 2012 2:14am EST

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LONDON Nov 20 (Reuters) - German Bund futures edged up on Tuesday as a sense of caution returned to euro zone markets after France lost another of its triple-A ratings.

Moody's stripped France of its prized triple-A badge on Monday, cutting the sovereign credit rating on Europe's No. 2 economy by one notch and leaving it with a negative outlook, citing an uncertain fiscal outlook and a deteriorating economy.

While widely expected, the downgrade injected some caution into the market, sending the euro lower against the U.S. dollar .

"Although it's not great, the market doesn't seem too worried. It's only a modest positive for Bunds," a trader said.

"Away from that it's still pre-Eurogroup speculation but it's priced in that there's some sort of rubber stamping of aid for Greece."

Athens appears to be on track to receive long-delayed funding under its latest international bailout after approving laws on Monday to enforce budget targets and ensure privatisation proceeds are used to pay off debt.

Euro zone finance ministers meet later on Tuesday to discuss releasing the funds.

December Bund futures were 12 ticks higher at 143.13.

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