* Bund futures rise half a point as GDP data falls short
* Limited recovery hints at underlying risk-appetite
* Technical charts point to fresh losses for Bunds
By William James
LONDON, Feb 14 German Bund futures rose on
Thursday as economic growth data for the euro zone fell short of
expectations and pushed some investors towards the safety of
The euro zone economy slipped deeper into recession than
expected in the last quarter of 2012, contracting 0.6 percent
compared to a forecast of 0.4 percent. Germany, France and Italy
-- the region's three largest economies -- all performed worse
That propelled German bonds -- which are seen as a safe but
low-yielding place to park cash during times of stress -- higher
on the day. Bund futures rose 55 ticks to 142.60.
"This is not good news. It shows a need for fairly relaxed
monetary policy for some time to come and it increases the risk
on the peripherals," said Elisabeth Afseth, analyst at Investec
Weak growth has the double-pronged effect of hampering the
weaker economies on the euro zone's fringes as they look to
escape their large debt burdens, and keeping 'core' German
yields low in anticipation of a low ECB interest rate.
Italian yields rose 3 basis points on the day
to 4.42 percent while the Spanish equivalent
nudged 2.5 basis points higher to 5.23 percent.
However, the relatively small size of the market's reaction
to the data reflected the market's underlying optimism that the
worst of the crisis had passed.
"The figures came out worse than expected but this was
somewhat priced in. The market is forward looking and expecting
a recovery in the second half of this year," said Alessandro
Giansanti, strategist at ING in Amsterdam.
"There's a mild widening in the periphery today but I don't
see this as the start of a new trend."
Italian and Spanish bonds have performed strongly this week,
and Italy was able to complete its first sale of 30-year debt in
nearly two years on Wednesday.
This positive undercurrent left the Bund future vulnerable
to further falls, which could be exacerbated by any breach of
technical chart levels, market participants said.
A close below 141.90 would probably be enough to turn
momentum indicators negative on the Bund, said UBS technical
analyst Richard Adcock, triggering a fresh trade recommendation
targeting a fall to 140.20 over the next few days.
(Editing by Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)