Italian BTPs are the best performers in the....>

EGBS: Italian BTPs are the best performers in the EGB market in early Tuesday

trading with the 10-yr BTP yield falling 5.6bps to 2.333%, while the German

10-yr Bund yield is 4bp higher at 0.564%. This has tightened the 10-yt Bund/BTP

spread by nearly 10bps to 177bps.

- Its not fully clear the reason for the rally in BTPs, however earlier this

morning newswires reported Italy's President saying that he could announce a new

Prime Minister on Wednesday or Thursday.

- There is a dearth of European data released again Tuesday, however the

Bundesbank releases it's latest monthly report at 1000GMT, but this is unlikely

to influence markets. So attention likely to remain on Italy.

- Euribor futures have opened on the soft side with the strip steepening as blue

contracts tick 2 to 3 ticks lower while white contracts remain unchanged.