EURO GOVT-Bunds slip on U.S. fiscal deal progress

LONDON Tue Dec 18, 2012 2:09am EST

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LONDON Dec 18 (Reuters) - German Bund futures slipped on Tuesday as increasing signs of progress in U.S. budget talks eased demand for low-risk assets.

The prospect of a series of painful automatic tax hikes and spending cuts next year dimmed slightly when U.S. President Barack Obama made a counter-offer to Republicans that included a major change in position, according to a source familiar with the talks.

That spurred some investors to unwind their positions in safe havens such as U.S. Treasuries and German debt -- assets used as hedges which should rally if a "fiscal cliff" deal isn't struck. Bund futures fell 24 ticks to 144.62.

"We're lower on the fiscal cliff progress. The markets are very thin out there and so price moves could get overdone today," a trader said.

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