EURO GOVT-Bunds flat, pause after previous day's rally

LONDON Tue Feb 5, 2013 2:14am EST

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LONDON Feb 5 (Reuters) - German Bund futures were little changed on Tuesday, pausing for breath after renewed worries in the euro zone spurred the contract's biggest daily rise since December in the previous session.

Bund futures were flat at 142.64 one day before a German auction. Austria will sell bonds maturing in 2019 and 2022 later in the day.

"The correction may go somewhat more," Piet Lammens, strategist at KBC said.

Political uncertainty in Spain and Italy arrested the recent rally in lower-rated debt on Monday and investors would keep a close eye to see whether the momentum persisted.

A good indication of how concerned markets are about a corruption scandal in Spain, which led to calls for Prime Minister Mariano Rajoy to resign, will be demand at a Spanish bond sale on Thursday.

Investors will also look at data from the U.S. vast services sector due later on Tuesday to gauge the monetary policy outlook after recent releases have mostly painted an upbeat picture of the world's largest economy.

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