EURO GOVT-Euro zone bonds rally on view Fed exit may take time
* Bonds rally across credit spectrum, led by peripherals * Soft consumer data adds to view Fed to maintain stimulus * Bund futures back near one-week high By Emelia Sithole-Matarise and Ana Nicolaci da Costa LONDON, June 14 (Reuters) - Euro zone bonds rallied across the board on Friday on a growing view that the U.S. Federal Reserve will keep monetary policy accommodative to help the economy at its meeting next week. Weak U.S. industrial ouput and consumer sentiment data supported the case for continued bank stimulus, allaying markets' concerns the Fed was preparing for a quick exit from its quantitative easing scheme. Earlier, the Wall Street Journal said an adjustment in the Fed's bond-buying programme did not mean the U.S. central bank would end it "all at once" or that the Fed was "anywhere near raising short-term interest rates". "The market is looking ahead to the FOMC next week, possibly thinking we could get a slightly more dovish tone out of the Fed," ICAP strategist Philip Tyson said, adding there could be another selloff if these expectations aren't met. "It feels like there might be a little bit more calm now going into Wednesday (when the Fed makes its decision). We've had a big shakeout in positions so positioning shouldn't be an aggravating factor for bonds going forward." Friday's bond rally was led by riskier euro zone debt, with Italian yields down 7 basis points at 4.29 percent while Spanish equivalents earlier fell 10 bps to a day's low of 4.50 percent before retreating as traders prepared for bond sales next week. Prices of debt issued by bailed-out Portugal rose even more sharply, with 10-year yields falling 21 bps to 6.33 percent. Yields on higher-rated euro zone debt also fell. "It's just a bounce from a very aggressive (sell-off)," one trader said. Financial markets have been choppy in recent weeks, with trade dominated by views on the timing of a possible Fed exit from ultra-loose monetary policy, making European assets more sensitive than usual to U.S. data releases. This week's figures have been mixed, with Friday's industrial and consumer sentiment numbers missing forecasts, while data on Thursday showed initial jobless claims fell last week while retail sales rose more than expected in May. Against the backdrop of mixed U.S. data, Commerzbank said in a research note the Fed should remain on hold and confirm its bond purchasing programme without any cuts next week. German Bunds also rebounded. Bund futures rose 67 ticks to settle at 143.86, having hit their lowest since mid-February earlier in the week at 142.02.