Irish/German bond yield spread hits record high

LONDON Nov 11 (Reuters) - The premium investors demand to hold 10-year Irish government bonds rather than German benchmarks hit a euro era peak on Thursday as investors fretted about Ireland's debt pile and its ability to fund itself.

The 10-year Irish/German government bond yield spread IE10YT=TWEBDE10YT=TWEB expanded by 20 basis points on the day to 665 bps, with traders saying liquidity had dried up.

"It's just a continuation, but the market isn't functioning properly, there doesn't seem to be any buyers," a trader said.

"The 4-year area of the curve is exploding. There're similarities with Greece a few months ago with the flattening but what will be the ultimate end we can't be sure."

The 2/10 year Irish bond yield curve has flattened to 137 bps from 239 bps on Monday.

(Reporting by Emelia Sithole-Matarise and Kirsten Donovan)