EURO GOVT-Bunds fall as strong Spain, Italy debt sales weigh

LONDON Fri Jan 18, 2013 2:09am EST

LONDON Jan 18 (Reuters) - German Bunds fell at the open on Friday as solid debt auctions from the euro zone's stragglers and upbeat U.S. data this week cooled demand for low-risk bonds.

Bunds extended this week's falls after Spain capped a week of good auctions for peripheral euro zone issuers on Thursday, marking a successful start to Madrid and Rome's 2013 fund raising efforts.

Growing trader concerns about tough U.S. talks to raise its debt limit to allow the federal government to continue borrowing were, however, seen capping German debt losses.

"The auctions went very well and there was strong U.S. data so the market could only focus on the negatives for Bunds," a trader said.

"It's a long weekend in the U.S. Maybe there might be a little bit of short covering. We've still got this debt ceiling stuff coming up I think the market shouldn't sell off too far."

The Bund future was last 17 ticks down at 142.59 compared with 142.76 at Thursday's settlement.

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