EURO GOVT-Bunds steady as focus falls on 10-year auction

LONDON Wed Jan 16, 2013 2:15am EST

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LONDON Jan 16 (Reuters) - Bund futures held firm at Wednesday's open with investors looking forward to a 10-year bond sale by Germany that was expected to attract healthy demand, aided by a recent rise in yields.

Overall, German bond prices have risen so far this week as the desire to hold low-risk, liquid assets has been boosted by U.S. wrangling over raising its self-imposed debt limit.

In the build up to the launch of Germany's new 2023 bond, the Bund future was 3 ticks lower at 143.26.

The current 10-year Bund yields were expected to draw in bidders at the auction having risen to attractive levels relative to recent months. Yields rose as much as 23 basis points during early January before retracing slightly as buyers re-emerged.

"The yield pickup and outright yield level closer to 1.60 percent again should attract real money accounts," Commerzbank strategists said in a note.

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