EURO GOVT-Strong demand for Bunds as Cyprus worries linger

LONDON, April 2 Tue Apr 2, 2013 2:06am EDT

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LONDON, April 2 (Reuters) - German Bund futures rose on Tuesday as investors started the week in cautious mood, still wary over the broader impact of Cyprus's landmark bailout, and with demand supported by below-par U.S. data released on Monday.

The Bund future rose 9 ticks to 145.58, building on gains made last week when investors took fright at the risk of contagion from a Cypriot bailout which hit bank depositors hard.

Over the weekend Cyprus detailed losses of around 60 percent on savings of more than 100,000 euros -- a larger-than-anticipated amount which was expected to further knock confidence in the safety of the euro zone banking sector.

Bunds were also supported by data released on Monday, when European markets were closed, which showed U.S. manufacturing slowed in March, denting optimism about global growth and boosting the appeal of low-risk bonds.

"Even though we are likely to see some profit taking ahead, the recent market action clearly illustrated (core) bonds continue to find strong demand," said Jan von Gerich, chief analyst at Nordea in Helsinki.

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