Despite German Chancellor Angela........>

EGB SUMMARY: Despite German Chancellor Angela Merkel calling a truce with the

Interior Minister, there are already concerns that this may prove fleeting.

French and German long-end yields have drifted lower through the afternoon while

Italian BTP yields have reversed the morning's gains. 

-  The German bund curve has flattened during the day, driven largely by the

longer end outperforming. The benchmark 10-year bund yield has fallen to 0.289%

from a morning high of 0.327%, while the 2-year yield has edged up to -0.678%

from -0.689% at the open.

-  The French curve has similarly flattened with the 2s10s spread narrowing to

111.2bps from a high of 114.3bps. OATs have rallied at the short and long end,

with the 10-year yield pushing down to 0.634% from a session high of 0.671%.

- Although Italian BTPs have sold off, yields are close to the open with the

curve broadly flat. 

- Having steepened during the morning, the EURIBOR futures strip is now flat on

the day.