EURO GOVT-Bunds steady on dovish ECB, Ireland eyed

LONDON Fri Feb 8, 2013 2:16am EST

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LONDON Feb 8 (Reuters) - German Bund futures held steady in early trade on Friday with demand for low risk assets underpinned by a cautious note from the head of the European Central Bank over the risks facing the euro zone economy.

Bunds pushed higher on Thursday after ECB President Mario Draghi that the ECB will monitor the economic impact of a strengthening euro, feeding expectations the surging currency could open the door to an interest rate cut. He also played down a rise in money market rates.

"Bunds had to go up after Draghi. He was pretty dovish. I don't think you can rule out a rate cut in the first half of the year and that should keep things underpinned," a trader said.

The Bund future was last 4 ticks up on the day at 142.86 compared with 142.82 at Thursday's settlement.

Market focus was also on Irish bonds after benchmark 10-year yields slid to their lowest since before the start of the subprime crisis in 2007 on news Dublin clinched a bank debt deal that will cut its borrowing needs over the next decade.

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