EURO GOVT-Bunds rise on U.S. fiscal worries

LONDON Wed Nov 28, 2012 2:04am EST

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LONDON Nov 28 (Reuters) - Bund futures firmed on Wednesday as lack of progress towards averting large-scale, automatic fiscal tightening in the U.S. next year supported safe haven assets.

The Congress and the White House are in talks to reach a deal on budget measures to avoid the so-called "fiscal cliff", which economists warn could send the United States back in recession and implicitly hit the global economy.

Senate Majority Leader Harry Reid said on Tuesday that he was disappointed that there had been "little progress" on the issue.

At 0702 GMT, Bund futures were 13 ticks higher at 142.36.

"Reid came out and said there was little progress on the fiscal cliff and as long as that's in play we're not going to see Bunds trade off too far ... given the growth implications next year," one trader said.

The uncertainty in the U.S. overshadowed a deal in the euro zone to release the next aid tranche to Greece to keep the indebted country afloat.

The renewed demand for low-risk assets boded well for a sale of five-year German debt later in the day.

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