March 21, 2013 / 7:21 AM / 4 years ago

EURO GOVT-Bunds dip after Fed meeting but Cyprus limits losses

2 Min Read

LONDON, March 21 (Reuters) - German Bund futures opened slightly lower on Thursday as the U.S. Federal Reserve's commitment to its aggressive stimulus policy soothed sentiment rattled by an impasse over a plan to bail out Cyprus.

Although the Fed acknowledged signs of improvement in the United States' economic outlook, Chairman Ben Bernanke said he had not yet seen meaningful changes to the troubled labour market and pointed to fiscal headwinds.

His comments supported riskier assets and weighed on the low-yielding ones, which have rallied earlier this week on the back of worries that disagreement over how to bail out Cyprus could eventually lead to the island's default.

At 0709 GMT, safe-haven Bund futures were 14 ticks lower at 144.16.

"Bernanke remained accommodative saying that there's green shoots but they need unemployment to drop in order for them to relook stimulus," one trader said.

"(But) in Europe you have no resolution in Cyprus so you have conflicting pull on both sides."

Cyprus ordered banks to stay shut till next week to avert financial chaos after it rejected the European Union's plan to impose a levy on bank depositors as part of a bailout and turned to Russia for aid.

Spain plans to sell between 3 and 4 billion euros worth of 2015, 2018 and 2023 bonds later in the day.

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