- The rally in German bunds lost........>

EGB SUMMARY: - The rally in German bunds lost momentum by midday. The long end

has outperformed since the open, with the curve steepening. The 2s10s spread has

narrowed to 98.6bps from a high of 100.6bps.

- The French OAT rally has similarly pulled back with yields off the lows of the

day. The 7-year benchmark has posted the largest yield gains over the day;

currently trading at 0.323%, down from an intraday high of 0.348%.

- The market awaits the next sovereign credit rating assessment from S&P, which

is likely to hit the wires after 2100BST. BTPs rallied sharply from 1300BST with

the 2-year yield pushing down to 1.145% from a high of 1.221%. 

- The short end of the Spanish bond curve has rallied consistently during the

day, while the longer end followed BTPs in staging a strong rally after midday.

The curve has subsequently steepened with the 2s10s spread widening to 175.8bps

from an afternoon low of 174.0bps.

- Euribor futures are flat in the whites and up 2.0-3.0 ticks in the

greens/blues