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Jul 3 2015 European bonds and stocks traded cautiously on Friday before a Greek referendum on EU-prescribed reforms that could determine the country's future in the euro zone and which polls suggest could go either way.
Yields on top-rated German 10-year Bunds, the benchmark for European borrowing costs, fell as some investors chose to preserve their capital in low-yielding but relatively safe assets. European stocks dipped and were set for the biggest weekly drop in two months, while the euro edged higher.
The moves were marginal, though, as investors did not want to position too heavily on either side.
Supporters of Greece's bailout terms have taken a wafer-thin lead over the "No" vote backed by the leftist government, 48 hours before Sunday's referendum, an opinion poll showed.
The poll by the respected ALCO institute for newspaper Ethnos put the "Yes" camp on 44.8 percent against 43.4 percent for "No". But the lead was within the pollster's 3.1 percentage point margin of error, and 11.8 percent of respondents said they were still undecided.
"However, it's a lot worse on the other side as a 'No' vote will present a host of uncertainties that could really rattle markets ... Either way, traders will need to buckle up for a tumultuous Monday."
Many investors were lightening up positions and staying on the sidelines.
While Europe was fixated on Greece, a rout in Chinese stock markets continued. Chinese markets, which had risen as much as 110 percent from November to a peak in June, have collapsed since June 12, losing more than 20 percent.
The Shanghai Composite Index (.SSEC) was down 5.8 percent, while the CSI300 Index fell 5.4 percent.