* Ultra-easy ECB policy outlook supports riskier assets
* Italian yields stable before zero coupon, linker debt
* The Netherlands, Belgium to sell short- to long-term bonds
By Emelia Sithole-Matarise
LONDON, May 28 German Bund futures dipped on
Tuesday, with signals the European Central Bank will keep policy
ultra-easy supporting riskier assets.
The debt market took its cue from European shares, which
edged back towards 5-1/2-year highs after ECB Executive Board
member Joerg Asmussen said on Monday the bank would stick to its
expansive monetary policy for as long as necessary.
Stock markets fell last week on concerns the U.S. Federal
Reserve might start scaling back its stimulus programme.
"Equities seem to be stabilising and this is taking a toll
on (U.S.) Treasuries and dragged Bunds lower. Ten-year Bund
yields look like they are going to test 1.5 percent pretty
soon," said RIA Capital Markets strategist Nick Stamenkovic.
The Bund future was 20 ticks down at 144.06 while
German 10-year yields were up 1 basis point at 1.43 percent.
The Bund broke through a key technical level at 144.23, the
38 percent retracement of its rally between the end of January
and the beginning of May, with volumes picking up as UK markets
reopened after a holiday.
The next near-term support was at 143.87/91, the lows posted
on March 18 and 25, said UBS technical analyst Richard Adcock.
"We would expect a short-term consolidation above the
support level, but with bearish momentum and trending tools, a
break is likely soon to trigger fresh downside to first the gap,
then deeper 62 percent (retracement) level at 142.40," he said
in a note.
Bunds were also coming under some pressure as traders made
way for supply from the top-rated Netherlands of up to 3 billion
euros of 10-year bonds.
Belgium aims to raise 2.9 billion to 3.9 billion euro in
auctions of five-, 10- and 20-year benchmarks as well as a 2035
non-benchmark bond. Both auctions are expected to fare well as
the countries offer higher yields than benchmark German debt,
In lower-rated markets, Italian yields held
steady before an auction of up to 3.5 billion euros of zero
coupon and inflation-linked debt in a test of bond investor
demand for peripheral bonds after they were caught up in last
week's selloff in equity markets.
Equivalent Spanish yields were slightly lower
at 4.32 percent.