* Calming in Ukraine weighs on safe-haven German debt
* Spanish, French yields rise before auctions
* Portugal could resume bond auctions before bailout exit
* ECB meets on Thursday, set to leave rates unchanged
By Joshua Franklin
LONDON, March 6 German government bond yields
rose on Thursday as talks to resolve the crisis in Ukraine were
seen easing tension, lifting global appetite for risk and
weighing on demand for safe-haven debt.
Investors were also looking ahead to a European Central Bank
meeting, at which it was expected to ease policy.
Although high-level talks on the Ukraine crisis made little
apparent headway on Wednesday, the diplomatic efforts were due
to continue on Thursday.
This lifted riskier assets such as shares and left investors
less keen on safe-haven German Bunds and U.S. Treasuries.
"The Bund is down and that has to do with the international
backdrop," said Peter Schaffrik, head of European rates strategy
at RBC Capital Markets. "Treasuries were weaker, Asian equities
were higher, you've got more stories coming out of Ukraine that
the situation eases."
German 10-year Bund yields, the benchmark for
euro zone borrowing costs, edged up 2 basis points to 1.63
France and Spain were due to sell bonds on Thursday, with
analysts predicting solid demand. France plans to sell between 7
billion and 8 billion euros of debt, while Spain hopes to raise
between 4 billion and 5 billion euros..
"There's probably better demand for Spanish than French
bonds at this moment but I don't think the French auction will
be a major hurdle for the bond market today," said Nick
Stamenkovic, a bond strategist at RIA Capital Markets in
Spanish 10-year yields were up 2 bps, while
the French equivalent rose by 3 bps.
Portuguese 10-year yields edged 1 bp lower to
4.74 percent after fresh indications the country could become
the second euro zone member after Ireland to exit its
international bailout later this year.
The head of Portugal's debt agency said on Wednesday the
euro zone member could resume regular bond auctions before it
exits an international bailout in May and aims to pre-fund for
The ECB is expected to hold off on cutting its refinancing
and deposit rates, opting instead to end its "sterilisation"
operations of offsetting the money it puts into the system
though bond purchases by withdrawing other money.
"It might help on the margin but it's not a significant
move," RIA Capital Markets' Stamenkovic said. "Much more
important would be if they cut the refinance rate and the