* Nikkei says Obama close to nominating Summers as Fed chief
* Bund losses seen limited before U.S. retail sales
* All eyes on Fed decision to cut stimulus
By Emelia Sithole-Matarise
LONDON, Sept 13 (Reuters) - German Bunds fell on Friday with U.S. Treasuries on a media report that U.S. President Barack Obama was close to nominating former Treasury Secretary Lawrence Summers as the next Federal Reserve chief.
Japan's Nikkei newspaper, quoting unnamed sources, said Obama "is set to" name his ex-economic adviser Summers as early as next week.
Some investors see a potential Summers-led Fed adopting a more hawkish monetary policy stance than under current incumbent Ben Bernanke. That is adding to market nervousness about a change of tack at the Fed ahead next week's meeting at which it is expected to start trimming its stimulus measures.
Debate in Washington has focused on whether Obama will pick Summers or Fed Vice Chair Janet Yellen to succeed Bernanke, whose term expires in January. The appointment must be approved by the Senate.
Benchmark U.S. yields spiked to 2.957 percent, within sight of a 25-month high of just above 3 percent, hit last week as expectations firmed that the Fed will begin to cut back its massive monetary stimulus. They later retreated with investors wary of taking new positions before the Fed meeting.
German Bund futures were 15 ticks down at 137.63, retreating from a session low of 137.17 hit earlier.
Cash 10-year yields were 1.3 basis points up at 1.957 percent, off the day's peak of 1.99 percent. Some traders said their proximity to the 2 percent mark breached last week for the first time in 1-1/2-years was luring back buyers.
"The market was selling off on the story on Summers but now we are seeing a bit of buying across the curve. Some of these (yield) levels are looking attractive but the market shouldn't rally too far," one trader said.
Bunds and other top-rated euro zone bonds reversed some of the previous day's gains, notched as investors used the completion of a raft of debt sales this week to buy back into a cheapened market.
Comments by European Central Bank President Mario Draghi reiterating that the economic recovery in the euro zone was still "very, very green" and that short-term money market rates were unwarranted also helped the rebound in Bunds on Thursday.
Against that backdrop, German 10-year yields are set to struggle to go back above 2 percent before the Fed's decision.
U.S. retail sales and consumer confidence data due later are seen having a muted impact on the market as they are unlikely to change expectations that the Fed will trim its bond purchases.
"To see yields pushing significantly higher it would require a very strong number but I don't think there's strong momentum in markets ahead of the FOMC meeting next week," said Patrick Jacq, a strategist at BNP Paribas in Paris.
Investors are now focused on how much, not whether, the U.S. central bank will cut its monthly asset buying with new money after its September 17-18 meeting. Recent below-forecast data, including jobs growth in August and consumer spending and durable goods orders in July, has deepened uncertainty about the likely extent of the reduction.
A Reuters poll of economists on Monday found most now see the Fed trimming its $85 billion monthly bond purchases by about $10 billion, less than previous estimates of about $15 billion.
"The risk is they may do $10 billion and tweak forward guidance and we have a bit of a recovery afterwards," another trader said.
Italian bonds continued to lag Spanish ones, weighed down by uncertainty over the survival of Rome's government. Italian 10-year yields edged up 2 basis points to 4.54 percent, nudging further above Spanish equivalents, which were 1 basis point lower at 4.46 percent.