* Bunds considered expensive, vulnerable to correction * German yields could rise to 1.30 pct - analyst * Central bank cash to support Italy regardless of politics By Ana Nicolaci da Costa LONDON, April 25 German Bund futures were up slightly on Thursday but analysts said the euro zone's top-rated debt was vulnerable to profit taking in what looked set to be a quiet session. In the absence of any major data in the euro zone, investors could look to Britain's first-quarter gross domestic product data to see if it reinforces the gloomy economic picture painted by recent releases out of the United States and Germany. Rising expectations for an interest rate cut by the European Central Bank as early as next week has provided German Bund futures with support recently, making them vulnerable to a correction, analysts said. "Most of this rate excitement and the expectation for a 25 basis points' lower refinancing rate should be in the price by now," said Rainer Guntermann, strategist at Commerzbank. "Here the market needs further bullish impetus. It may risk a corrective move from here but very short term, maybe just for today." German Bund futures were up 10 ticks at 146.29, having reached a new June contract high this week and drawing closer to record highs of 146.89 hit in June. Patrick Jacq, rate strategist at BNP Paribas, said the contract was too expensive at current levels and there was room for 10-year German yields to push higher to the 1.30 percent area from 1.23 percent currently. "At the moment I am relatively short of the Bund," Jacq said. ITALY Italian yields were higher as investors balanced the benefits from the designation of a new premier with concerns that the differences within a future coalition would make it difficult to implement growth-boosting, deficit-cutting reforms. A senior centre-right official said on Wednesday the party would not support a government that does not agree to eliminate a housing tax, underscoring the difficulties in even agreeing a new government. Italian 10-year government bond yields were 4.6 basis points higher at 4.05 percent and the Spanish equivalent was 2.3 bps higher at 4.31 percent. Regardless of the political developments in Italy, analysts expect there to be ongoing demand for the still relatively high-yielding debt thanks to abundant central bank liquidity in the financial system. "It's a mixed bag but so far the market is relatively constructive," Jacq said. "In the very near term I don't see a risk of a major sell-off after the strong rally." Ultra-loose monetary policy from major central banks around the world has been lifting risky and safe assets alike as investors seek to put the abundance of cash to work.