OREANDA-NEWS. March 24, 2015. Spanish yields nudged up on Monday after upstart anti-austerity party Podemos made big inroads in regional elections, with a vote split across the political spectrum offering a foretaste of national elections later this year.

But the market moves were modest, tempered by the prospect of further purchases by central banks as the European Central Bank's trillion euro quantitative easing scheme enters its third week. Traders and strategists said they had not yet seen the ECB or national central banks buying on Monday, however.

Sunday's vote in the Spanish region of Andalusia showed anti-austerity sentiment that brought the leftist Syriza party to power in Greece has now taken root in Spain and ended its two-party system that has dominated for over four decades.

Yields on Spanish 10-year bonds were 2 basis points higher at 1.20 percent, with Italian equivalents also up slightly at 1.23 percent.

"For some time in the past few weeks Italy was outperforming Spain, given with Podemos there's some political risk as we don't know how strong they will be in general elections and how much this might influence the established parties in their programmes," said DZ Bank strategist Daniel Lenz.

"But QE is of course a very strong force and there's strong demand. It could be that if the Spanish central bank is not in the market yet it could be a good opportunity to take some profit after yields came down sharply."

Investors could also take cues from ECB President Mario Draghi who will address a committee of the European Parliament on Monday, with the QE programme's progress and Greece's financial problems likely to be high on the agenda.

Investors will be keen to see if the ECB kept up the brisk pace of bond purchases when it releases later in the day the amount of assets it bought last week, after it bought about 10 billion euros of debt in the first week.

TSIPRAS WOOS MERKEL

Greek yields dipped ahead of Greek Prime Minister Alexis Tsipras' first official visit to euro zone paymaster Germany. He is seeking Chancellor Angela Merkel's backing to unlock the cash Greece needs to avoid crashing out of the euro.

Greek bonds and stocks won some respite last week after Tsipras assured European Union creditors he would soon present a full set of economic reforms to help release the cash.

Merkel has said no money will be released before Athens implements budget measures and other reforms, however, and Monday's meeting is not expected to produce concrete results. {ID:nL6N0WO072]

With deposits flowing out of Greek banks and the government set to run out of money in coming weeks, Tsipras is losing time to convince EU partners to release the funds.

St Louis Federal Reserve President James Bullard said an exit of Greece from the euro would be possible but prove very painful for Greece itself.

"I think it's (Grexit) much more manageable than it would have been a couple of years ago, and so I do think it could be done, but I don't think it's advisable to try to go down that path," he told CNBC in an interview.