* Yield of 12-mo bills down at 0.65 pct
* Yield of 10-yr benchmark at 8-yr low (Updates with analyst quotes, benchmark yield)
By Marja Novak
LJUBLJANA, June 10 (Reuters) - Slovenia's short-term borrowing costs fell on Tuesday when the finance ministry sold 138 million euros of treasury bills, overshooting the original 60 million euro target with yields falling on all maturities.
"The yields were down as expected after euro zone market liquidity rose following the ECB rate cut on Thursday," said Saso Stanovnik, chief economist of investment firm Alta Invest.
The yield on Slovenia's 10-year benchmark bond also fell on Tuesday, reaching the lowest level since Slovenia adopted the euro in 2007. It fell to 2.985 percent from 3.081 percent a day before.
"Yields will probably fall further providing that the new government, which will be formed after the election, will continue with privatisation and reforms," Stanovnik added.
Slovenia will hold a general election on July 13 after the centre-left Prime Minister Alenka Bratusek resigned in May because she lost the battle for the leadership of the Positive Slovenia party.
Bratusek remains in power until a new government is in place and had pledged that privatisation will continue according to plans. The country hopes to sell telecoms operator Telekom and Slovenia's second largest bank Nova KBM by the end of this year.
The yield for the longest, 12-month treasury bills, inched down to 0.65 percent from 0.75 percent at the previous auction in May, while the yield of 6-month bills reached 0.26 percent versus 0.4 percent last month.
The yield for 3-month bills fell to 0.15 percent from 0.25 percent in May. Total bids amounted to 329 million euros. Results on .
The next treasury bill auction is scheduled for July 8.
Slovenia narrowly avoided an international bailout in December by pumping some 3.3 billion euros of government funds into the local banks to prevent them from collapsing under a large amount of bad loans.
The country has already borrowed some 4.5 billion euros this year and plans no further bond issues in 2014. (Reporting By Marja Novak; editing by Tom Heneghan)