EURO GOVT-Bunds rangebound as investors await Fed
* German Bunds rise in tight ranges before Fed * Lower-rated euro debt also little changed * Fed seen leaving door open for data-dependent tapering * German 10-year sale expected to attract decent demand By Ana Nicolaci da Costa LONDON, June 19 (Reuters) - German Bund futures rose in thin trade on Wednesday but were expected to move in a narrow range with investors reluctant to take big bets before a two-day U.S. monetary policy meeting ends. Comments by Federal Reserve Chairman Ben Bernanke last month fired up speculation the U.S. central bank could soon curb its asset buying, hurting equity and bond markets. He is expected to announce later on Wednesday the Fed will keep buying bonds at a monthly pace of $85 billion while holding their options open to scale back the programme later this year if the U.S. labour market continues to improve.. "Everyone is a bit cautious given there is not only uncertainty to what Bernanke is going to say... but also how the market will interpret any comments," Michael Leister, senior interest rate strategist, at Commerzbank said. German Bund futures rose 31 ticks on the day to 143.52, having seen their biggest daily loss since late May in the previous session. Bunds have fallen in recent weeks on concerns over the future of central bank stimulus. "I don't think there is a huge position out there," one trader said. "He will say (tapering) is data-dependent, so maybe we don't get a great deal particularly new, I think (that's) the danger." Before the Fed meeting, the market will absorb 5 billion euros of 10-year German debt. The backdrop for the auction was tricky given investors were on the sidelines before the Fed, but the recent pick-up in yield should secure a reasonably good auction, Leister said. Ten-year German bonds last yielded 1.55 percent, up around 40 basis points since the beginning of May, mirroring an about 50 bps rise in equivalent U.S. Treasury yields over the same period. "I don't think they want to push (yields) too much higher, because obviously that's the cost of funds for the U.S. economy, so the smart thing to do is to say very little," Padhraic Garvey, head of investment grade strategy at ING said. "The reaction, assuming that (Bernanke)... doesn't do anything overly dovish, would be for the market to continue to do what it's been doing which is beginning to price in a better set of macro circumstances." Lower-rated euro zone debt was also rangebound. Ten-year Spanish yields rose 1.7 basis points to 4.57 percent and the Italian equivalent was 1.8 bps higher at 4.31 percent. The policy-setting Federal Open Market Committee will announce its decision at 1800 GMT. Bernanke will hold a news conference 30 minutes later.