EURO GOVT-Bunds fall as investors brace for more supply

LONDON Wed May 15, 2013 2:24am EDT

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LONDON May 15 (Reuters) - Bund futures fell on Wednesday as investors faced another bout of supply but traders said the losses should be limited after data showed the German and French economies were still struggling to grow.

Germany sells 5 billion euros of two-year debt later this session while Italy said on Tuesday it was planning to issue a new 30-year bond on the heels of a successful Spanish syndication.

Expectations for solid demand for the Italian paper, after a sale of new 10-year Spanish debt via syndication attracted huge demand in the previous session, was taking the shine off the safe-haven bond market, traders said.

"Italy announced a 30-year deal last night so presumably that will be today," one trader said. "I don't think they would do it unless there was good demand for it."

German Bund futures were 29 ticks lower at 144.45.

Data showed Germany's economy grew by a weaker-than-expected 0.1 percent in the first three months of the year and France contracted by a bigger-than-forecast 0.2 percent. Gross domestic data for the whole of the euro zone is released later in the day.

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