* Bunds extend recent gains as Greece aid saga drags on
* French data hints at growing economic malaise in euro zone
* Looming U.S. fiscal cliff to support Bunds in medium term
By William James
LONDON, Nov 9 German bonds rose on Friday,
building on the week's sizeable gains as Greece's debt problems
neared boiling point and with economic growth in the euro zone
and United States under threat.
Greece will vote on the country's 2013 budget on Sunday, the
next big hurdle towards unlocking access to urgently needed
international aid after Wednesday's tight vote in favour of an
austerity package worth 13.5 billion euros.
However, euro zone finance ministers were unlikely to sign
off on the next tranche of aid for Greece at a meeting on
Monday, according to a senior EU official.
That left Greece mulling the idea of rolling over a 5
billion euro repayment next week because it did not have enough
cash to redeem the treasury bill outright.
"I think the vote goes through on Sunday but with Greece
we're looking bigger picture, aren't we? There's a lot of
supportive factors out there, and it's one-way trade today
backed by real money buying," a trader said.
Bund futures rose 35 ticks on the day to 143.33,
adding to gains of more than a point since last Friday's close.
The 10-year yield slipped 3 basis points on the day to 1.33
percent, approaching the late August low of 1.3
percent. Beyond that level, traders cited resistance at 1.27
percent - the 23.6 percent retracement of a major selloff seen
in the first half of the year.
HEADED FOR THE CLIFF
The rise in low-risk Bunds gained momentum after data
underlined that poor economic growth in the euro zone was
spreading to the region's larger states.
Data on Friday showed industrial production in France, the
euro zone's second-largest economy, shrank by more than forecast
in October and the country's central bank said it expected to
slip into recession at the end of 2012.
In recent days, both the European Commission and the
European Central Bank have acknowledged a worsening outlook for
the euro zone's struggling economy.
Outside the euro zone, the safety bid has also been fuelled
by the re-election of Barack Obama as U.S. president and the
risk that politicians will be unable to negotiate a way around
$600 billion in spending cuts and tax hikes which could
extinguish growth in the world's largest economy.
Market participants said the likelihood of protracted
wrangling should maintain demand over the medium term for less
risky, "core" bonds as a shelter from the uncertainty.
"Looking at the next few weeks we would expect both Bunds
and U.S. Treasuries to trade supported at about current levels,"
said Rainer Guntermann, strategist at Commerzbank in Frankfurt.
"Obviously the fiscal cliff is the big issue and over here
in Europe we have economic weakness coming through in the core