EUROPE - European institutional investors have shunned the recently issued German long bonds: for the €6bn bond isseue only €5.885bn were offered, and only €4.9bn were allocated during Wednesday's auction.

Traders were quoted by the German press as saying that the auction of the 30-year bonds was "disastrous", while last year similar placements in the Netherlands and in Austria were also met with little enthusiasm from pension funds and other institutional investors.

Experts expected that, due to various pension reforms throughout Europe, European pension funds would invest in the 30-year bonds issued by the German government on Tuesday, but interest of pension funds has been meagre.

Analysts gauged that 30-year bonds are unattractive, as the yield difference between long term and short term bonds is very small at the moment also investors are willing take on more risk.

Also, consultants said that pension funds expect interest rates to rise: "If that is your vision and you would invest in that kind of long term bonds you would loose a lot of money," said Hans Braaken, consultant at Aon in the Netherlands.