EGBs/GILTS: Core EGBs and Gilts have...>

BOND SUMMARY: EGBs/GILTS: Core EGBs and Gilts have retraced earlier gains while

Italian BTPs spreads have narrowed Friday morning.

- Negative sentiment toward Italy ahead of tonight`s S&P review appears to be

fading slightly in line with our note at 1056BST suggesting fears were overdone.

- 10-Yr BTP spreads/Bunds had risen as high as 270.8bps, though last down 3.4bps

on the day to 266.4bps. Spain and Portugal also in by about 1bps.

- Earlier, Olli Rehn continued to make a case for amending the ECB`s inflation

targeting framework, expressing concerns over weak inflation expectations. 

- Key European data done for the week; US GDP eyed later.

- Latest futures prices:

* Jun Bund futures (RX) up 4 ticks at 165.73 (L: 165.65 / H: 165.92)

* Jun BTP futures (IK) up 41 ticks at 129.61 (L: 129.14 / H: 129.67)

* Jun OAT futures (OA) up 13 ticks at 162.11 (L: 161.93 / H: 162.16)

* Jun Gilt futures (G) steady at at 127.62 (L: 127.6 / H: 127.8)