* Talks on U.S. budget deal go on, some progress seen * LDP wins Japan election, increasing cbank easing bets * Bund futures inch lower, periphery little changed By Marius Zaharia LONDON, Dec 17 German Bunds dipped on Monday following signs of progress in the United States towards averting a fiscal crisis next year, but losses were capped by the limited time left for U.S. lawmakers to reach a final deal. The first palpable sign of progress in talks to avoid automatic, large-scale fiscal tightening next year came on Sunday, when Republican House Speaker John Boehner offered to accept a tax increase for the wealthiest Americans. His offer knocks down a key stumbling block in the negotiations, but Boehner and President Barack Obama still have plenty of unresolved differences such as the budget for healthcare programmes. About $600 billion worth of tax hikes and spending cuts are due to come into force next year if a deal is not reached. Bund futures were 7 ticks lower on the day at 144.86, while 10-year cash yields were 0.7 basis points higher on the day at 1.368 percent. "At least we do seem to have some broad (positive) backdrop for negotiations going forward, but clearly time is running out," said Nick Stamenkovic, bond strategist at RIA Capital Markets in Edinburgh. Some traders had expected a landslide election victory in Japan by the Liberal Democratic Party to give a strong tailwind to equities and weigh on safe-haven assets, such as German debt. Japan's next Prime Minister Shinzo Abe piled pressure on the central bank on Monday, saying voters had backed his call for aggressive monetary stimulus. The vote gave the LDP and its small ally a two-thirds majority in the lower house, which is expected to ease the passage of growth-boosting measures. But as volumes get thinner towards the end of the year, many investors will stay clear of large bets and trades are likely to become more "technical", traders said. European shares were steady. "It's mainly a technical move (in the Bund market). We are now testing last Friday's lows at around 144.75 and we have failed to break that (in a sustainable way)," one trader said. "We're now playing the (range) between 145.00 and that level." Debt issued by the euro zone's lower-rated sovereigns was little changed, with Italian 10-year yields trading 1 basis point lower at 4.58 percent.