EURO GOVT-ECB easing bets keep Bunds underpinned

LONDON Tue May 7, 2013 2:08am EDT

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LONDON May 7 (Reuters) - German Bunds were little changed on Tuesday, with expectations the European Central Bank may ease policy further offsetting selling pressure from a pick-up in the U.S. labour market.

Bund futures rose to record highs last week after the ECB cut its key interest rate to 0.50 percent and signalled it was ready to cut its deposit rate below zero percent if needed.

The bank's President Mario Draghi departed from a prepared speech on Monday to reiterate this stance.

ECB easing bets helped stabilise German debt after Bund futures tumbled by about a point on Friday when a U.S. non-farm payrolls report beat market expectations, denting appetite for low-risk assets.

"We are watching data, but I think expectations for more easing from the ECB should keep (Bunds) underpinned. Draghi was dovish yesterday," one trader said.

Bund futures were 1 tick lower on the day at 146.15, having hit an all-time high of 147.20 on Thursday.

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