* Bund futures hit their lowest since September 2013
* Investors bet on growth pick-up this year
* T-note/Bund yield spread may widen further-analyst
By Marius Zaharia
LONDON, Jan 2 Prices of German Bund futures fell to their lowest since September 2013 on Thursday as investors dumped top-rated bonds in favour of riskier assets, betting on a further pick-up in global economic growth in 2014.
Top-rated government bonds saw a dismal end to last year as the economic outlook improved and the U.S. Federal Reserve announced it would start trimming its bond-buying stimulus programme in 2014.
Investors will have euro zone and U.S. business surveys, as well as U.S. jobless claims data to scour later in the day and see if their growth expectations for 2014 are justified.
Bund futures were last 37 ticks lower at 138.80, having hit their lowest since September 2013 at 138.68 minutes after the market opened. Cash 10-year Bund yields rose 3.7 basis points to 1.964 percent.
"Bunds are under pressure ... on the back of still strong risk sentiment. We expect (the economic data) to offer further positive news," Commerzbank strategist Michael Leister said.
"But we think at current levels around 2 percent the potential for a further rise is rather limited."
Traders expected volumes to be low and exacerbate market moves as many investors were still on holidays.
Stubbornly low inflation in the euro zone and other major economies as well as promises by the Fed and the European Central Bank to keep interest rates low for a long period are expected to cap German and U.S. yields.
Some analysts still expect the ECB to ease monetary policy further, especially if falling excess liquidity levels in the banking system keeps money market rates elevated.
Eonia, the overnight euro zone bank-to-bank lending rate ended 2013 at a two-year high of 0.446 percent due to seasonally thin liquidity. Analysts expected it to fall in coming days, but the extent of the fall could spark some speculation about further ECB monetary policy easing.
DZ Bank strategist Christian Lenk does not expect the ECB to make any move in the near term, but says the central bank will continue to strike a soft tone, leading to a widening of the yield gap between Bunds and U.S. Treasuries.
"We can expect a further widening of the transatlantic spread. The Fed will be less dovish as it starts tapering and the ECB most likely will remain pretty friendly," he said.
The Bund/T-note yield spread last traded at 107 bps.
Other euro zone bond markets were relatively steady.