Bunds could rise further until details of the ECB's plans are clarified, traders said.

German ECB board member Joerg Asmussen sought on Monday to take some of the heat out of the debate over the bond-buying plan, saying the scheme would be tailored to dispel concerns it would be used to fund governments -- a taboo for Germany's Bundesbank.

"The newsflow out of the ECB still leaves a lot of room for surprises, both on the upside and on the downside," said Elwin de Groot, senior market economist at Rabobank.

"Markets want to see strong commitment from the ECB that it is willing and able to pin down (Spanish and Italian) yields to levels much lower that they have been at lately. This is why you see Bund yields below 1.35 percent for now."

Bund futures were last 2 ticks higher on the day at 143.81, while cash 10-year yields were flat at 1.34 percent.

Short-term prospects for Bunds would also depend on how easily Italy is able to sell some 20 billion euros of debt in three auctions this week.

There was little concern about an Italian sale of up to 3.75 billion euro in two-year zero-coupon bonds and inflation-linked debt later in the day, with the real test of investor appetite due on Thursday, when Italy issues five- and 10-year bonds.

Tuesday's sale is expected to go smoothly as short-dated paper benefits from strong domestic demand and the prospect of ECB intervention in that sector of the yield curve.

 There was more focus on the sale of up to 6.5 billion euros of longer-term debt on Thursday as interest for 10-year peripheral paper from foreign investors has been limited recently.

 "Today's auctions should go pretty smoothly. I wouldn't expect any problems particularly as the ECB is expected to buy short-dated bonds," RIA Capital Markets bond strategist Nick Stamenkovic said.

"But appetite for beyond the five-to-seven-year sector is pretty low so Italy might well need a concession ahead of the auction on Thursday to ensure the supply is reasonably well absorbed."

Italian yields were slightly higher across the curve before the auction, with the 10-year up 4.5 basis points at 5.76 percent.

Spanish 10-year yields were slightly higher at 6.43 percent.

The other major factor in bond markets this week will be US Federal Reserve Chairman Ben Bernanke's speech to a conference of central bankers and economists at Jackson Hole, Wyoming on Friday.

The speech will be dissected for any clues to the timing of any additional monetary stimulus from the Fed.