EURO GOVT-Spanish bonds rally as Greek plan boosts periphery

LONDON Dec 3 (Reuters) - Spanish and Italian bonds rallied on Monday as appetite for higher yielding euro zone bonds picked up after Greece announced better-than-expected terms for its debt buyback.

Greece said on Monday it would buy back bonds through a Dutch auction as part of efforts to cut its ballooning debt, setting a price range above market expectations.

Yields on some of the region's other struggling sovereigns' bonds fell, with Spanish 10-year yields dropping 10 basis points on the day to 5.24 percent.

Equivalent Italian yields were also lower and low-risk German debt prices retreated from the day's peaks.

"(The details) are better than expected. Therefore, periphery now getting a bid... and that's weighing on Bunds," one trader said.