March 27, 2013 / 7:09 AM / 4 years ago

EURO GOVT-Cyprus uncertainty pushes Bunds to near 3-week high

LONDON, March 27 (Reuters) - German Bund futures rose to their highest in almost three weeks on Wednesday as worries over the potential fallout from the Cyprus bailout deal kept low-risk assets underpinned before an Italian debt auction.

Cyprus is expected to complete capital control measures on Wednesday to prevent a run on banks by depositors after the country agreed a bailout deal that will wipe out some senior bank bondholders and impose losses on large depositors.

Investors worry that the deal may become a model for solving other crises in the euro zone, despite reassurance from some policymakers that it would not, and that depositors at banks in other countries may fear their savings are in danger too.

Bund futures, an asset investors chase in times of increased tension, were last 5 ticks higher on the day at 144.87, having risen as high as 144.95 at the start of the session -- their highest since March 7.

"Ongoing uncertainty about Cyprus is keeping interest in German government bonds high," analysts at Helaba Landesbank Hessen-Thueringen said in a note.

Italy, marred by political uncertainty after its inconclusive elections in February, sells up to 7 billion euros of five- and 10-year bonds later in the day.

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