EURO GOVT-Ten-year Portuguese yields fall towards 7 pct

LONDON, July 4 Thu Jul 4, 2013 3:12am EDT

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LONDON, July 4 (Reuters) - Ten-year Portuguese bond yields fell on Thursday as Portugal's government attempted to overcome recent troubles while investors took to the sidelines before a Spanish auction and European Central Bank meeting.

Foreign Minister Paulo Portas's rightist CDS-PP party met all day on Wednesday and decided their leader would talk to Portugal's prime minister in an attempt to find a way out of a political crisis that unnerved bond markets this week and could derail Lisbon's efforts to emerge form its international bailout.

"Overnight there appeared to be some attempts to heal some rifts within the coalition," one trader said, explaining the move.

Ten-year Portuguese yields fell 27 basis points to 7.26 percent, having soared above 8 percent in the previous session. Five-year yields fell 35 bps to 6.53 percent. The yields on Spanish and Italian debt were broadly flat.

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