Core EGBs have pared early gains and....>

EGB SUMMARY: Core EGBs have pared early gains and periphery spreads have come

down from opening wides as risk appetite has picked up from a weak start.

- Sep8 Bund futures are up 9 ticks at 163.33, after opening 12 ticks higher at

163.36. The German curve is bull flattening, with 2-Yr yields flat at -0.598%,

10-Yrs down 0.5bps at 0.326% (ahead of Bund auction later), and 30-Yrs

outperforming, down 0.6bps at 0.986%.

- Italian spreads are sharply lower, with gains focused on the short-end. 2-Yr

BTP spreads over Bunds down 6.2bps at 160.1bps, yield 6.2bps lower at 1.002%.

- Gains in the Spanish curve are focused on 10-Yrs, yield down 1.7bps at 1.351%.

- Euribor futures are a little stronger, with a 0.5 tick move higher across much

of the strip, with long-dated Blues outperforming, up as much as 1.5 ticks.

- No key data in EMU this morning and no speakers scheduled, with main event

being 10-Yr Aug-28 Bund auction this morning for E3bln (closes at 0930GMT).