EGBs experience some sharp moves........>

EGB SUMMARY: EGBs experience some sharp moves mid-way through EMU afternoon

session as 10-US Tsy note approached and then finally broke the 3% level, before

falling back sharply on disappointing US Richmond Fed mfg index. German curve is

looking to close little changed on the day with German 10-yr Bund -0.1bp at

0.636%.

- 2-yr Schatz yield is 0.1bp higher at -0.549% having clawed back earlier losses

as demand at Schatz re-opening auction came in very strong.

- EMU periphery bonds have reversed earlier widening to Bunds after supply was

out of the way and there was renewed hope of a new Italian government being

formed. 10-yr Bund/Bonos spread is unchanged at 67.6bps vs high of 69.8bps,

while Bund/PGB spread is now 106bps vs 109.3bps seen this morning.

- Italy sold max E3.75bln in CTZ and BTPei's and Finland E1bln 10-yrs

- Earlier German IFO business climate indicator slipped to 102.1 in April from

103.3 in March, more than the fall to 102.7 expected by analysts. While the

current conditions and expectations component dropped to 105.7 from 106.6 and

98.7 from 100.0 respectively.