The return of Italian bond futures this week after a 10-year absence may help traders protect against price swings in Europe's lower-rated debt than contracts tied to German bonds, known as bunds.

Ten-year Italian bond futures start trading on Eurex, Europe's biggest derivatives exchange, tomorrow.

F&C Asset Management, Investec Asset Management and Aletti Gestielle SGR said the contracts should enable them to hedge their holdings of Greek, Irish and Portuguese debt more effectively as the slump in those securities during the financial crisis caused the gap between their yields and benchmark bunds to widen to the most since the introduction of the euro.

"It will be very useful," said Fabrizio Fiorini, a money manager at Aletti Gestielle in Milan, one of the 10 biggest holders of Italian bonds. "I can use it as a proxy" for peripheral bond markets,he said.

Italy, the most indebted nation in the EU, first offered a futures contract in September 1991, when its bonds were denominated in lire. The contract, traded through Eurex rival Liffe, was discontinued in 1999 after the euro was created. Greek debt is rated A- at Standard & Poor's, six levels below Germany's AAA. Ireland has an AA rating at S&P, with Portugal at A+.