/EGBs-GILTS: Periphery EGB spreads.....>

BOND SUMMARY: /EGBs-GILTS: Periphery EGB spreads are wider early Tuesday, while

Gilts/Bunds and rate futures are slightly higher.

- EU`s Moscovici saying `I`m not favoring sanctions` on Italy took a bit of the

sting out of the widening in BTP spreads, but 10Yr vs Bunds nearly back to where

they were before that headline. 10-Yr spread v Germany 5.1bps wider at 287.2bps.

- Gilts have reversed earlier gains to new contract high for Jun futures. Last

up 28 ticks at 130.19 (L: 130.14 / H: 130.37).

- Italy and Germany had decent auctions earlier, Italian BTPei cover ratios

higher than last time but real yields backed up; Schatz cover+tail steady.

- Greece giving up some of Monday`s gains, 10-Yr spread up 3.6bps at 333.9bps.

- Euribor strip fairly flat through Blues, with Golds 2-3.5 ticks higher. Short

Stg up 2.5-3.5 ticks from Mar21 onward, with near-dated contracts flat.

- Latest futures levels:

* Jun Bund futures (RX) up 8 ticks at 167.72 (L: 167.52 / H: 167.91)

* Jun BTP futures (IK) down 55 ticks at 129.4 (L: 129.19 / H: 129.82)

* Jun OAT futures (OA) steady at at 163.66 (L: 163.55 / H: 163.79)