* Demand for new syndicated issue at unprecedented 24 bln eur -econ min
* Final orders due later on Tuesday; seen selling 7 bln eur
* Treasury draws strong demand, lower yields, at bill sale
By Paul Day
MADRID, Jan 22 (Reuters) - Investors piled into Spain's new 10-year bond on Tuesday as the country made the most of renewed appetite for debt from the euro zone's weaker economies, also beating targets at a short-term auction.
The treasury's new benchmark - the first in more than a year - had drawn estimated demand of around 24 billion euros ($32 billion), Economy Minister Luis de Guindos said, describing the sum as unprecedented.
A government source close to the deal said Madrid would, however, choose to sell no more than 7 billion euros, to leave appetite in the market. Earlier the same source said it was aiming to place 4 billion euros.
Spain, which has been at the sharp end of Europe's debt crisis on concerns it cannot control its public deficit, also looked to have trumped recent fundraising efforts by fellow euro zone struggler Italy.
Rome sold 6 billion euros of a new 15-year bond on Jan. 15, its first in two years, meaning both countries have already made significant inroads into daunting 2013 funding programmes.
Using a strong syndicate for Tuesday's sale was "a good excuse for Spain to show that they're not in trouble and don't need a bailout," said Jo Tomkins, strategist at consultancy firm 4Cast.
Spain's budget gap is one of the highest in the bloc, in the midst of a drawn-out recession and sky-high unemployment.
It probably missed its deficit reduction target for last year but it remains largely on track with its economic programme, the European Commission said in a report published in Brussels on Tuesday.
Madrid's funding costs on international markets rose to euro-era highs last July as traders demanded ever higher premiums to hold the country's debt. Yields have since fallen after the European Central Bank pledged to back struggling euro zone states with bond purchases if needed.
Prime Minister Mariano Rajoy has resisted calls to apply for European aid which would trigger the ECB programme as yields on Spanish debt tumbled to more sustainable levels for the cash-strapped Treasury.
Not including Tuesday's sale, Spain has already reached around 9 percent of its 2013 issuance target, while Italy has met around 10 percent of its funding.
The front-loading in part reflects concerns that political tensions, especially surrounding Italy's upcoming elections, could dampen the current market enthusiasm for the euro zone's peripheral debt.
"I'm under the impression that the (Spanish) Treasury is making the most of a benign market to increase its liquidity for whatever comes in the future," economist at Cortal Consors Estefania Ponte said.
In a further sign of the interest in peripheral paper, Spain sold 2.8 billion euros worth of short-term debt, beating the target amount for the auction and with average yields at their lowest since March 2012.
At the auction, the yield on the 3-month bill fell to 0.441 percent, compared with a peak of 2.434 percent when market tensions were at their height in July.
The final price on the 10-year syndicated bond was set at midswaps plus 365 basis points, putting investor returns at around 10 basis points above the current secondary-market yield of 5.1 percent.
The Treasury last sold a syndicated bond in February 2012 of its current 10-year benchmark with a 5.85 percent coupon. The bond was introduced to the market Nov. 2011.
At 1206 GMT, 10-year Spanish yields were about one basis point lower at 5.15 percent, while comparable Italian yields also fell marginally to 4.20 percent.