Jan 30 (Reuters) - The German Bund future rose on Monday ahead of a European Union summit later in the day, as a Greek debt swap deal had yet to be finalized. Greece appeared to be close to clinching the bond swap agreement with private creditors after months of talks but it looked unlikely that a preliminary deal would be secured in time for the summit on Monday. . In a further reminder of the euro zone's problems, Fitch downgraded the sovereign credit ratings of Belgium, Cyprus, Italy, Slovenia and Spain on Friday, indicating there was a 1-in-2 chance of further cuts in the next two years. ID:nL2E8CRBTG]. It is against this backdrop that Italy kicks off the week's supply, with sales of up to 8 billion euros of debt in the five and 10-year sectors. "It doesn't help," a trader said of the downgrade. "I think (the market) might try to get a decent concession going into it." The German Bund future was up 39 ticks on the day at 139.28. Portuguese bonds will come in focus as yields have risen to new euro-era highs. Investor are increasingly betting that it will follow Greece in seeking a second bailout and debt restructuring. Unresolved problems in Greece would also likely cast a shadow over the EU summit, where leaders are expected to sign off on a permanent rescue fund for the euro zone and agree on a balanced budget rule in national legislation. "Rubber-stamping the fiscal compact and the ESM (European Stability Mechanism), I think that's in the price," the trader said.

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