* Spain bailout delays putting upward pressure on yields * Rise stalled by fear of missing out on ECB intervention * Bunds fall after U.S. data, solid 10-yr auction expected By William James LONDON, Sept 25 (Reuters) - Spanish government bond yields rose on Tuesday as confidence waned that Madrid will move swiftly to make the bailout request needed to activate the European Central Bank's bond buying programme. After rallying during August on the first indications of the ECB's plan to preserve the euro, markets have become acutely sensitive to any indications of Spain's willingness to ask for a bailout or any potential hurdle blocking the support programme. ECB Governing Council member Ewald Nowotny defended the legal basis for the bond buying plan, designed to bring down struggling euro zone states' borrowing costs, after markets were roiled by a German tabloid report saying Bundesbank lawyers were looking into potential limitations imposed by the European Union treaties. The negative headlines gave edgy investors a reason to sell Spanish bonds, pushing yields up 17 basis points to 3.28 percent on two year debt and 9 bps to 5.79 percent on the 10-year benchmark. "It looks increasingly unlikely that Spain will, in the very short term, apply for aid. The market was already pricing in the ECB being active in the market at the front end of the peripheral curves," said Gianluca Ziglio, strategist at UBS. The growing impatience was seen at a short-term bill sale, at which borrowing costs were higher than a month ago, despite the paper falling within the likely scope of the ECB purchases. However, the rise in yields is likely to be slowed by investors' reluctance to push Spain too hard by selling their bonds, for fear of missing out when the ECB support -- or the "Draghi put" as it is known -- is activated by an aid request. "For now our view is that the pressure is not really high enough on Spain," said Michael Leister, a senior rate strategist at Commerzbank. "This muddling through by politicians can continue because what we can see is the market seems to respect this 'Draghi put' so everybody is reluctant to go short Spain and Italy because you don't want to be caught by a quick activation of the ECB (bond purchases)." CHOPPY CORE German bonds, the low-risk euro zone asset of choice, suffered their first fall in seven sessions as an initial rise gave way to steady selling pressure, accelerated by better than expected U.S. data. The Bund futures contract fell to a session low of 139.96, down 44 ticks on the day with traders citing automated sell orders around the previous day's highs and closing levels of 140.49 and 140.40 respectively. Nevertheless, the nervous environment, coupled with a recent rise in yields, should pave the way for a solid sale of German 10-year bonds on Wednesday, analysts said. "The market is quite supportive for core. At these (yield) levels around 1.55 (percent) they are relatively attractive, particularly if you look at the risks there are further down the road if Spain continues to delay," UBS's Ziglio said. Ten-year German bond yields rose 5 basis points on the day to 1.58 percent, well above the lows of 1.13 percent seen earlier this year.

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