UPDATE 1-Hungary to slash govt debt sales, market illiquid

(Adds details, market comment)

BUDAPEST, Oct 10 (Reuters) - Hungary's debt agency AKK announced plans on Friday to cut net government debt sales by 200 billion forints ($1.09 billion) over the rest of the year, but the government debt market was at a near standstill.

"There is no buying interest though some 2011/C bonds were bought at 11.70 percent and 13/D at 11.50," one trader said.

The AKK said that the amount of government bonds to be offered at auctions would be reduced by 40-50 percent. Three- and 12-month Treasury bill sales will fall by 10-20 percent, and the agency will hold more auctions of shorter-maturity "liquidity" bills.

A 15-year bond auction scheduled for Oct 22 was cancelled.

"During the rest of the year, only expiring debt will be refinanced, in a modified issuance structure, with the intention to help market consolidation," the AKK said.

Trading in the government bond market effectively stopped on Thursday as the global liquidity crunch hit markets in Hungary and elsewhere in central Europe.

The government announced earlier on Friday that it would allow domestic pension funds to buy government debt without limits, but traders said the measure did not immediately trigger buying interest.

(Reporting by Sandor Peto; editing by David Stamp)