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Italian debt futures close little change

MILAN: Italian debt futures closed little changed after a lacklustre session which saw players shrug off a slight lira rally, dealers said.

"We took our cue from other European markets and with the Bund only moving in a disgraceful 11 basis points range we weren't going to go anywhere," a London LIFFE dealer.

Focus was firmly fixed on Friday's U.S. non-farm payroll data and Thursday's three and five year Btp auction.

Wednessday's 8.5 trillion lire floating rate CCT auction and 1.5 trillion lire 10-year BTP sale met with solid demand and falling prices. Tomorrow the Treasury will auction 2.0 trillion lire of three-year BTPs and 1.5 trillion lire of five-year BTPs.

Political worries over the possibility of early elections still lingered, although former prime minister Silvio Berlusconi was quoted as saying the early vote he has sought since his resignation would not take place until it suited his opponents.

"People made a lot of money in Italy through August, now it's a return to the political season...with the budget due to be presented soon caution will be the key," a Milan trader said.

Alex Hoar, trader with the Kyte Group in London, thought the firmer lira and eurolira contract might encourage the September Btp contract to fill a gap created between Friday's 104.07 low and Tuesday's 103.65 high.

"Today was an inside day, Tuesday will be interesting to see whether the bulls or bears take control," Hoar said. "We'll find out how strong the shorts are," he added.

The September Eurolira contract firmed three ticks to 89.70, while overnight rates dipped to an average 10.15 percent from 10.21 percent yesterday.-Reuter