Core EGBs and Euribor futures are.......>

EGB SUMMARY: Core EGBs and Euribor futures are coming off their lows after a

weak opening triggered by modestly hawkish comments from ECB`s Villeroy and some

cautious optimism on Italian politics.

- 10Yr Bund yields rose as high as 0.606% but are now trading a little stronger

at 0.597%, up 3.8bps on the day. German curve steeper, with 2s10s spread up

2.8bps at 116.2bps.

- 10Y BTP/Bund spread up only 1.5bps to 132.77bps, up from the day`s low of

130.61bps but but well off last week's high above 138.

- Portuguese 10-year PGB/Bund spreads have fallen to a six-session low at

110.75bps. Portugal now 22.1bps inside Italy, taking aim at the 22.7bps level

set in March.

- The Euribor futures strip remains steeper, with whites flat and greens and

blues offered. Dec 21 future hit a low of 99.115, now off 3.5 ticks at 99.125.

- Up later: 5-Star and Lega meeting with Italian Pres Mattarella starting from

1630CET to talk government formation; ECB speakers including Praet & Coeure,

with Lautenschlaeger earlier today a non-event.