* Bunds rebound after last week's big sell-off
* Further falls seen likely on improved U.S. outlook
* Euro zone data, ECB may be next market movers
By Marius Zaharia
LONDON, Jan 7 German Bunds edged up on Monday, with a plunge to one-month lows last week prompting investors to buy back the cheapened paper, although further falls were expected after a raft of forecast-beating U.S. data.
Figures on Friday showing the U.S. services sector grew in December at its fastest pace in 10 months, and a slightly better than expected jobs report, added momentum to a sell-off in German debt last week sparked by a last-minute budget deal to avert a U.S. fiscal crisis.
Bund futures fell by almost three points last week to their lowest in a month at 142.52. On Monday, at the start of the first full week of trading of 2013, they were 28 ticks higher at 143.03.
"We had a decent sell-off last week across fixed income markets and we're now entering a period of consolidation, but the momentum still seems to be with the bears after what we've seen in the U.S.," one trader said, referring to investors who expect Bunds to fall further.
The rebound may also reflect caution before a spate of euro zone data and a European Central Bank rate-setting meeting later this week, at which the bank is seen holding fire and may back away from the easing signals sent last month.
This week's euro zone releases include unemployment, retail sales and some business sentiment indicators.
"A lot of the sell-off was led by the United States last week. To see further falls in Bunds you need some positive news in the euro zone as well," Rabobank rate strategist Lyn Graham-Taylor said.
"The ECB could be relatively neutral, not changing the deposit rate nor the refi rate and not doing anything else that's special."
UBS technical analyst Richard Adcock said despite the bounce, the "market can pull back further to test the Oct. 18 low at 141.14." He suggested a 141.20 target on Bunds, with stops placed at 143.80, just above the 38 percent retracement of last week's sell-off.
Ten-year German cash yields were 2.2 basis points lower on the day at 1.523 percent. Significantly, they broke above 1.46 percent last week -- a level they repeatedly failed to break in November and December -- signalling yields were likely to rise further.
Other euro zone bond yields were steady to slightly higher.