German 10-year bond auction draws strong demand

LONDON Aug 18 (Reuters) - Germany sold about 5 billion euros of new 10-year government bonds on Wednesday, which drew total bids worth 7.856 billion euros, indicating demand was strong despite a record low yield.

The sale came after both the U.S. Federal Reserve and Bank of England downgraded the assessment of their respective economies and data showed Japan's economic growth slowed to a crawl in the second quarter, bolstering appetite for safe-haven govenrment paper.

"The way it is priced with an average yield of 2.37 percent, it is pretty much at the tight end of the range so especially against the German curve the issue looks rather expensive," said Michael Leister, strategist at WestLB.

"Nevertheless it seems like there was demand ... and it looks like no matter how low yield levels drop there still seems to be decent demand for Bunds."

See [ID:nTAR001741] for full auction details.

Portugal is looking to raise nearly 1.4 billion euros by selling 3-month and 12-month Treasury bills. Results are due around 0930 GMT. (Reporting by Ian Chua)