RTRS:EURO GOVT-Italian long yields edge up in anticipation of 30-year sale
* Good demand expected for Italian syndication after Spain
* ECB rate cut bets to underpin demand at two-year German sale
* Weak data shows German, French economies struggling
By Ana Nicolaci da Costa
LONDON, May 15 (Reuters) - Long-dated Italian government bond yields crept higher on Wednesday as investors made room for a new 30-year Italian bond to be sold via syndication.
The announcement of the sale came on Tuesday, when a new syndicated 10-year Spanish bond attracted huge demand.
Germany also sells 5 billion euros of two-year government bonds, which analysts expect will be supported by expectations of further monetary easing by the European Central Bank.
"People are making room and building concession for the (Italian) deal," a trader said.
Market players expect solid appetite for the Italian bond, after investors, flush with central bank liquidity, also snapped up Slovenian and Portuguese debt this month.
"I don't think they would do it unless there was good demand for it," a second trader said.
Thirty-year Italian yields were 3.2 bps higher at 4.82 percent. Italian and Spanish borrowing costs over ten years were flat, having risen in early trade.
"We are still positive on the periphery," Alessandro Giansanti, senior interest rate strategist, at ING he said. "After the huge rally in the front end, (we expect) peripheral market investors will move out (along) the curve."
With the market trading in tight ranges, data underscored the difficulties euro zone economies are facing.
Data showed Germany's economy grew by a weaker-than-expected 0.1 percent in the first three months of the year and France contracted by a slightly bigger-than-forecast 0.2 percent. Gross domestic data for the whole of the euro zone is released later in the day.
Bund futures were flat at 144.74, after erasing early losses.
A sell-off in German debt this month cheapened the market and should favor the two-year German bond sale.
"There will be decent support because the market is still positioning for further intervention from the ECB," Giansanti added.
