Mon Nov 11, 2013 4:50am EST
* Bunds rise after biggest one-day fall since Sept on Friday
* Move part of broader euro zone bond rebound
* Euro zone outlook "fairly constructive" despite payrolls
By Ana Nicolaci da Costa
LONDON, Nov 11 (Reuters) - German Bund futures edged higher on Monday, after seeing their biggest one-day fall since September in the previous trading session, with the market poised for a quiet day due to a U.S. public holiday.
The move was part of a broader rebound in euro zone bonds, after a sell-off on Friday, when higher-than-expected U.S. jobs numbers brought forward bets of a cut in U.S. monetary stimulus.
"The sell-off on Friday was too aggressive and only in correlation with U.S. Treasuries. The signal from the ECB was very strong and that's going to be supportive for Germany and the other markets," Alessandro Giansanti, senior rates strategy at ING said.
Last week the European Cerntral Bank unexpectedly cut its benchmark interest rate by 0.25 points, reacting to what it said was evidence of protracted low inflation, pushing short-dated German yields to multi-month lows.
German Bund futures were up 13 ticks on Monday to 141.15 by 0942 GMT.
U.S. job growth unexpectedly accelerated in October as employers shrugged off a partial government shutdown and added 204,000 jobs to their payrolls - far above the 125,000 forecast in a Reuters survey.
After those numbers, more U.S. primary dealers now expect the Fed to scale back its economic stimulus programme before March, according to a Reuters poll on Friday.
The divergence in monetary policies on the two sides of the Atlantic was contributing to a widening in the yield gap between 10- and 2- year German yields, which traded near a two-week high.
"What we have seen historically is that the correlation at the long end of the curve has been pretty high between U.S. and German rates, so I think the influence of the ECB on the long end of the Bund curve is to a certain degree limited," said Christian Lenk, strategist at DZ Bank.
The rise was part of a broader rebound in euro zone bonds which was likely to continue, given the accommodative backdrop, traders said.
Ten-year Spanish yields fell 2.6 basis points to 4.094 percent, while equivalent Italian yields were 3 basis points lower at 4.12 percent.
Yields on bonds issued by the Netherlands, Belgium, Austria and France were all down about 2 basis points.
"At the end of the day, I suppose Europe is very well supported. Fine, we sold off along with Treasuries on Friday but the outlook for Europe is fairly constructive, so I don't see why we should sell off too far," one trader said. "I think we are in a 'buy dips' mentality in Europe."
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