* Bunds rise, periphery pressured before the weekend
* But Greek hopes see Bunds set for weekly decline
* Spanish yields edge up before Catalonia elections
By Kirsten Donovan
LONDON, Nov 23 German government bonds edged up
and yields on peripheral bonds rose on Friday as investors took
profits on a rally in Greek and other riskier debt that has
banked on a positive conclusion to Athens' latest aid talks.
Greece and its creditors looked to be inching closer to a
deal on Friday, leaving German Bunds on track for their first
week of losses in more than a month.
But there is still ground to cover to ensure more aid is
released to Athens on Monday and investors did not want to leave
themselves exposed to that or a regional election in Spain over
The transfer of 44 billion euros of funds has been delayed
by disagreements between the European Union and the
International Monetary Fund over how to make government debt
A senior Greek official said on Friday lenders had agreed on
new measures to cut the debt further but it still had to bridge
a 10 billion euro funding gap to gain the IMF's approval
Market reaction was muted. Analysts said that with the
likelihood of a deal already more or less priced in, more
concrete news would be needed.
"It's not the first time we have this type of news. The
market knows there is a disagreement," said ING rate strategist
"Until there is an official statement, detailing what they
want to do, ... we're not going to see so much of a reaction."
Greek government bond yields were little
changed at 16.49, close to their lowest levels since the
country's debt was restructured in March.
Bund futures were 17 ticks higher at 142.33, having
fallen around a point this week, and 10-year yields
were 1.5 bps lower at 1.42 percent.
"The main flows this week have been the reasonable buying of
the periphery from Spain to Greece. It doesn't take much to move
prices significantly and there's been enough of a one-way flow
in these markets to make a difference," a trader said.
As profits were taken on that peripheral rally, Bunds rose
and held gains despite business sentiment survey data from
Germany's Ifo institute beating analysts' expectations
"Bunds have had quite a bit of sell-off recently so we're
seeing a bit of a consolidation but are staying in pretty tight
ranges," a second trader said.
Elections in the Spanish region of Catalonia have been seen
as a hurdle before Spain would seek a bailout, but markets do
not now expect such a request this year given that the national
government has already completed its 2012 funding.
Spanish 10-year yields have fallen around 20
bps this week as peripheral markets rallied, further taking the
pressure off Spain to seek help.
They were last 2.5 bps higher on the day at 5.70 percent
after Standard & Poor's took ratings action on a host of Spanish