* U.S. budget impasse gives investors chance to buy back * Greek bonds under slight pressure after finmin comments * Markets not panicking over the U.S. "fiscal cliff" By Alistair Smout and Marius Zaharia LONDON, Dec 20 (Reuters) - Bunds firmed on Thursday as talks to avoid large-scale fiscal tightening in the United States seemed to be losing momentum, giving an opportunity for some investors to buy back into cheapened German debt. Financial markets have for weeks been sensitive to any developments in negotiations to avert $600 billion of automatic U.S. tax rises and spending cuts next year, which many fear would tip the world's top economy into a recession. A deal had looked within reach as the two sides made concessions, but the climate soured after Republicans announced plans on Tuesday to put an alternative tax scheme to a vote this week. On Wednesday, President Barack Obama threatened to veto the Republican measure if Congress approved it. Bund futures rose 18 ticks on the day to 144.33, having fallen more than a point in the last 10 days. Ten-year German yields were 1.4 basis points lower at 1.418 percent. "The Bunds are trading off the U.S. news, which was negative overnight with regards to the fiscal cliff," said Lyn Graham-Taylor, fixed income strategist at Rabobank. The size of the move was relatively small, however, suggesting that investors were not panicking about the limited time left for U.S. lawmakers to reach a compromise. "There are still some days left. Even if there's a delay they can still reach a deal in early January. People expect politicians to reach a deal," said Norbert Wuthe, rate strategist at Bayerische Landesbank. That meant that even if they reach a deal, Bunds should not suffer major losses, he said. Greece's bonds came under slight pressure after a sharp rally in the previous session. Finance Minister Yannis Stournaras said in the Financial Times the country was facing a critical year ahead. The yield on Greece's February 2023 bond was 12 bps higher at 11.74 percent. It fell well over a point in the previous session as the European Central Bank decided to once again accept Greek debt as collateral at its funding operations. "Periphery-wise, there's a little bit of a systemic risk increase over Greece, with the finance minister saying we're not out of the woods yet," Graham-Taylor said. DIRE CONSEQUENCES Though the outcome of the U.S. budget talks remains uncertain, analysts say the consequences of the "fiscal cliff" are potentially too dire for the White House and the Republicans not to achieve a compromise. "The risk is too high (that) we can have a strong sell-off in risky assets and that the U.S. economy will fall into recession, so they will try to find an agreement for the end of the year. They will push hard," ING's senior rates strategist Alessandro Giansanti said. A deal would boost equity markets and safe-haven debt would sell off, which could drive German 10-year yields to 1.55 percent but probably no higher: "The risks to the euro zone economy are still present in the market so they will not disappear because of (a) fiscal cliff agreement". Failure to reach an agreement before the end of the year would push 10-year German yields towards 1.30 percent, Giansanti added.