* Dublin seeks to raise 1 bln euros on Thursday
* Ireland's example helps Portuguese yields lower
* Bunds flat after earlier rise on China data
By Joshua Franklin
LONDON, March 10 Irish bond yields rose on
Monday, bucking the trend in the euro zone periphery, after the
country announced its first regular debt auction since
completing an international bailout.
Ireland's debt agency said it would seek to raise 1 billion
euros in an auction of 10-year bonds on Thursday, three months
after it became the first euro zone country to exit an EU/IMF
bailout. Dublin had said in February it would resume regular
bond auctions this month.
On the day, Irish bond yields rose by 3 basis
points to 3.11 percent as investors made room on their books for
the new bonds.
However, DZ Bank strategist Christian Lenk said demand for
Irish debt remained strong, particularly after ratings agency
Moody's in January upgraded the country's debt to investment
grade from junk.
"The sag today is driven by the news of the announcement but
this should not lead to a sustained underperformance," Lenk
said. "Irish bonds remain an attractive investment for a lot of
investors given its new renewed investment-grade status."
The prospect of a successful return to the regular market
for Ireland helped yields on Portuguese bonds to
near four-year lows on Monday. Lisbon hopes to follow Dublin's
example and exit its bailout later this year. Portuguese bond
yields fell 7.5 bps to 4.53 percent, their lowest since April
Investor appetite for higher returns following the European
Central Bank's decision to leave interest rates on hold helped
Spanish and Italian yields lower,
with the former down 4.6 bps at fresh eight-year lows of 3.32
"With the ECB interest rate set to stay low, investors are
still on the hunt for yield and Italy, Spain are safe pick-up
haves," said Rainer Guntermann, a strategist at Commerzbank in
Data showing Italian industrial production rebounded more
than expected in January also helped investor sentiment towards
Italy, whose 10-year yields were 2 bps lower at 3.41 percent.
Yields on low-risk German Bunds were flat on
the day at 1.65 percent, having earlier pushed higher on the
back of Chinese growth concerns following weak economic data in
the world's second-largest economy. Other top-rated euro zone
bond yields were also steady.
There was little progress over the weekend between the West
and Russia to resolve tensions over Ukraine and DZ Bank's Lenk
said investors were awaiting fresh developments in the dispute.
"Ukraine is still a potential market-mover," Lenk said. "But
as long as the status quo remains where it is I think investors
will keep a very, let's say, quiet hand towards that potential