June 18, 2013 / 6:12 AM / 5 years ago

EURO GOVT-Bunds dip on concerns over Fed bond buying

LONDON, June 18 (Reuters) - German Bund futures dipped on Tuesday in line with U.S. Treasuries on expectations the Federal Reserve may signal it is moving closer to trimming its bond purchases at its meeting this week.

Concern the Fed could start reducing stimulus which has been a major driver of stock market gains since last year has shaken financial markets, driving lower-rated euro zone bond yields away from multi-year lows and German yields to their highest in three months.

Markets have stabilised somewhat, however, since U.S. data on Friday came in weaker than expected.

At 0502 GMT, Bund futures were 22 ticks lower on the day at 143.56. Bunds often move in tandem with their U.S. counterparts due to their safe haven status.

“There’s talk about the Fed tapering (down asset purchases),” said one trader. “(Overall) the market is now positioned for hopes that they might not be as aggressive as feared, but conviction is very low.”

Markets will watch the release of Germany’s ZEW business sentiment survey at 0900 GMT, but any market reaction is likely to be limited before Fed’s announcement late on Wednesday.

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