EURO GOVT-Bund futures little changed before Spanish auction
LONDON May 9 (Reuters) - German Bund futures were flat on Thursday before an auction of Spanish government bonds that is expected to draw strong demand as investors seek to maximise returns in an environment of low official rates.
Expectations that the European Central Bank will ease policy further after it cut its key rate last week to 0.50 percent are keeping Bunds close to record highs and lowering the premium other euro zone bonds offer over the German benchmark.
Spain aims to issue between 3.5 billion and 4.5 billion euros of 2016, 2018 and 2026 bonds.
"We've got Spanish supply to contend with but I expect it will be fine in the current environment," one trader said. "As much as the periphery rallies at the moment I don't think it will weigh on Bunds. Bunds are cheap given the rate outlook."
Bund futures, a safe-haven asset that throughout the financial crisis has usually weakened when appetite for riskier assets picked up, were last 3 ticks lower at 145.82.
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