* Investors find refuge in Bunds amid equity sell-off
* Investors eye U.S. data as they try to gauge Fed outlook
* Auction lifts ten-year Italian bonds
By Ana Nicolaci da Costa
LONDON, June 13 German bonds rose on Thursday on
global equity weakness, while ten-year Italian government bonds
turned higher after an auction attracted relatively good demand.
Ongoing concerns about the future of central bank stimulus
weighed on equity markets and investors looked to U.S. retail
sales and weekly jobless claims to gauge when the Federal
Reserve may begin scaling back its bond purchases.
A recent pick-up in yields secured healthy appetite at an
auction of 15-year Italian bonds, even though borrowing costs on
the three-year paper on offer jumped to their highest level
"Everything taken into account, we think it was a rather
good auction." Michael Leister, senior interest rate strategist
at Commerzbank said.
Ten-year Italian bonds rebounded after the auction, while
shorter maturities remained under selling pressure. Italian
borrowing costs over ten years fell 3 basis points
to 4.34 percent.
"It seems a bit of a classical risk-off pattern again, with
equities selling off overnight, (German stocks) opening weaker
and Bunds finally catching a support from that."
Bund futures were 36 ticks higher at 143.15.
Japanese stocks fell over 6 percent as the prospect of
reduced stimulus from central banks roiled markets and European
shares opened lower, setting the tone for the day's trading.
Demand for the three-year Italian bond came in at 1.34 times
the offer, in line with a month ago, while the bid-to-cover on
the longer maturity rose to 1.73 from 1.32 at the previous sale.
The treasury sold 15-year bonds at 4.67 percent, in line
with the previous April sale.
"The market sold off quite heavily ahead of the auction and
then there was a very strong bid, particularly for the
15-year... and that seemed to put a floor under the market," one
Ten-year Spanish yields were down 5 basis
points at 4.57 percent but two-year yields were flat, mirroring
the outperformance of longer-dated paper seen in the Italian
At the opposite end of the credit spectrum, ten-year German
yields fell 3 basis points to 1.52 percent.
"The 1.60-1.62 (percent) area has held up quite well as a
support, we didn't push through here, so we are seeing a natural
bounce away from these levels," Leister added.
(Reporting by Ana Nicolaci da Costa; Editing by Chris Pizzey,
London MPG Desk, +44 (0)207 542-4441)