LONDON, Jan 22 (Reuters) - Bund futures were steady on Tuesday, with investors likely to stick to the sidelines in anticipation of a new 10-year Spanish bond.
Investors would look to the ZEW investor sentiment index for the latest gauge on the health of the euro zone's largest economy after data last week showed Germany's economy contracted in the fourth quarter.
Market participants would keenly look out for Spain's first new 10-year benchmark since November 2011, after a government source told Reuters on Monday the sovereign was testing the market for a syndicated sale.
German Bund futures were flat at 142.90.
"Basically what we are seeing is very volatile ups and downs with no straight bullish or bearish mood," Charles Berry, trader at Landesbank Baden-Wurttemberg said.
"People are standing on the sideline and my impression is people don't know how to (read) the spread tightening from those non-core countries to Germany - is it a stable situation or is it just a short-lived situation?"