* Aid optimism pushes Greek yield to post restructuring low
* Spanish yields down after auction kicks off 2013 funding
* Bond markets still pricing in Spanish bailout request
By William James and Marius Zaharia
LONDON, Nov 22 (Reuters) - Greek bond yields fell to their lowest since the country's debt was restructured in March as optimism that international leaders will agree on how to reduce the burden further dominated Thursday's quiet trading.
After lenders failed repeatedly to agree a plan to tackle Greece's sky-high debts, European commissioner Olli Rehn allayed concerns by saying euro zone ministers should be able to sign off on another tranche of aid on Monday.
The expectation that Greece will soon get more cash pushed down Greek yields for the 10th consecutive trading day, supported by continuing speculation that rescue funds could be used to buy back bonds from private investors.
The February 2023 bond yield dropped by more than half a percentage point to an intraday low of 16.164 percent, its lowest since the bond was issued as part of a debt restructuring in March.
"The idea that they could get more funding and buybacks is supporting," said Nordea chief analyst Niels From, although he cautioned that the scale of the move was not unusual for the infrequently-traded market.
Trading volumes were low across the euro zone as many participants stayed away with U.S. markets shut for Thanksgiving.
Nevertheless, Spanish debt rallied after the country received strong bids for its three-, five- and nine-year bond sale which raised an above-target 3.88 billion euros.
Ten-year Spanish yields fell 6 basis points on the day to 5.67 percent, continuing to recover after trading above 6 percent at the start of the week.
Having already met its 2012 fundraising target, the proceeds of Thursday's sale kicked off its 2013 funding campaign - a burden that Madrid is likely to struggle to carry without outside help.
Markets have rallied since July, coming back from their weakest levels since the launch of the euro on expectations Spain will eventually request aid and enable the ECB to buy its short-term bonds.
"It's a clear reflection that sentiment in Spain has improved markedly," RIA Capital Markets bond strategist Nick Stamenkovic said.
"They are already funded for 2012 and the market is betting that Spain will ask for a bailout early next year when they face a (wall of issuance). On top of that, markets seem pretty sanguine about Greece and they think somehow, by hook or by crook ... they're going to get their money."
Merrion Stockbrokers chief economist Alan McQuaid said comments from Angela Merkel supporting a likely deal for Greece next week would lead to further gains for fringe euro zone bonds in the near term. McQuaid said his firm would be buying such paper and selling higher-rated bonds in the coming days.
He expected Spain to ask for help possibly as early as next week once elections in the wealthy Catalonia region over the weekend are out of the way.
"I expect Greece will get a deal next Monday given Merkel's comments and ... Spain might start looking for a bailout next week," McQuaid said, adding that a post-bailout rally could "easily" take 10-year Spanish yields below 5 percent.
German Bund futures were 4 ticks higher at 142.21, having fallen 83 ticks in the previous two sessions. Charts pointed to further losses for Bunds in the near future as they broke below their 100-day moving average at 142.34.