EURO GOVT-Clash among Greece's lenders buoys Bunds
* Greece gets more time, but aid delayed
* EU/IMF spat keeping markets nervous
* Athens sells T-bills to roll over expiring debt
By Kirsten Donovan and Marius Zaharia
LONDON, Nov 13 (Reuters) - German government bonds ended Tuesday all but flat after an early rise triggered by disagreement among Greece's international lenders was reversed by signs Athens would secure funding for the rest of 2012.
A German government source told Reuters European countries were considering paying Greece several aid tranches, totalling around 44 billion euros, at the same time.
"The reality is, they will get the money," a trader said.
However, in the absence of clear agreement over support for Greece, safe-haven Bunds stayed close to recent highs.
Bund futures settled 3 ticks lower on the day at 143.14, having earlier hit a two-month high of 143.48. Ten-year yields were flat at 1.346 percent.
Greece's international lenders, including the European Union and the International Monetary Fund, stopped short of disbursing funds on Monday, clashing over how long the country should be given to reduce its debt to sustainable levels.
This meant the country was forced to roll over short-term borrowing. On Tuesday, it raised more than 4 billion euros at a T-bill sale, with the option to sell more, to meet a 5 billion euro redemption payment on Friday.
The IMF and the euro zone disagree over a long-term target to bring Greece's debt down to 1.2 times its economic output, a level considered sustainable.
"Until they get the money, the market will remain pretty jittery," said Nick Stamenkovic, rate strategist at RIA Capital Markets.
"But there's also ongoing concern about the medium-term fiscal outlook...and if the EU and IMF can't agree what debt level Greece should be aiming for, then it's not very encouraging."
But the real sticking point is that the IMF is pushing for the euro zone to take losses on Greek debt -- something that the bloc's paymaster Germany, which holds elections next year, says is illegal.
"The IMF is pushing for another debt restructuring ... The main thing now is to find an agreement for the next tranche to pay back the bills next month and this discussion hasn't finished yet," ING rate strategist Alessandro Giansanti said.
He said 10-year German yields could fall towards July's lows of 1.20 percent if weeks go by without an agreement.
Jean-Claude Juncker, the chairman of euro zone finance ministers, said a further Eurogroup meeting would take place on Nov. 20, while officials said more talks could be required the following week to cement a new deal.
But the fact that Greece was given two extra years to meet a target for spending cuts required by its bailout deal showed the lenders wanted the aid programme to continue, analysts said.
Strategists at Helaba Landesbank Hessen-Thueringen said that if investors remained risk averse Bunds could target 144.37, the Aug. 29 high. If the trend reversed, Bunds should find support at Nov. 8's low of 142.57 or the 100-day moving average at 142.26.
Germany will test market appetite for its debt on Wednesday with the launch of a new two-year bond, while Italy will sell up to 3.5 billion euros of three-year bonds as well as up to 1.5 billion euros of longer-dated paper.
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