A mildly choppy post-holiday trading....>

EGB SUMMARY: A mildly choppy post-holiday trading session for EGBs saw bunds

finish largely flat on the day, with the RXM8 8 ticks lower at 158.60 on the day

though solidly below Monday's pre-May Day close of 158.81. Bunds curve a little

steeper as the short end remained anchored.

- 10-year BTP/Bund spread reversed some of its earlier tightening on speculation

that an early Italian election may be avoided. After falling by 5bps versus

Monday's close to a low of 117.18bps, the spread widened as BTP yields rose by

4bps to 1.79% at one point on no apparent news shortly after 1200GMT, which

pushed the spread back up to 118.96bps.

- While periphery spreads tightened across the board overall, BTPs outperformed,

with the 10-year yield falling by 1.9bps to 47.7bps versus Bonos, which were

likely weighed down by upcoming supply Thursday as Spain taps 3-yr, 10-yr &

50-yr Bonos and 5-yr linkers.

- Flat trading across the Euribor futures strip, with minimal impact from

largely in-line economic figures this morning, and despite signs from EMU member

PMI data of inflation in the pipeline. EMU HICP data coming up tomorrow.