* Spain 10-year yields close in on 6 pct, then retreat * Spanish bailout uncertainty dominates trading * Bunds off day's lows after strong auction By Marius Zaharia LONDON, Oct 10 (Reuters) - Spanish bond yields and German Bunds held steady on Wednesday, with investors unable to predict the timing of a Spanish bailout with any precision, keeping debt markets in their recent ranges. Investors are growing increasingly nervous about Spain's perceived reluctance to ask for international help, a condition for the European Central Bank to start buying its bonds. However, they are unwilling to bet against Spanish debt, wary that an aid request could come at any time. The uncertainty buoyed demand at a German bond auction, but in secondary markets Bunds weakened. Spanish 10-year yields were last 4 basis points lower at 5.80 percent, having risen as high as 5.93 percent early in the session, with traders citing selling pressure from local banks before upcoming supply. "(Spanish Prime Minister Mariano) Rajoy is keeping all his cards to his chest and it's hard to gamble on what a political decision is going to be," one trader said. "It's all a waiting game at the moment. Certainly at least until the first regional election (in late October) we're going to be stuck in these ranges." Rajoy's native region Galicia holds local elections on Oct. 21, while Catalonia - where separatist sentiment is flaring up - holds election on Nov. 25. Some in the market speculate that Rajoy is only putting off a request for aid until after the elections to avoid losing any political points. Local banks have put Spanish bonds under some pressure early in the session. Traders said they were making room in their books before a private placement of bonds worth 4.86 billion euros that Spain plans to make between Oct. 11 and Oct. 17 to finance a support fund for the country's heavily indebted regions. GERMAN AUCTION Germany sold 3.1 billion euros of five-year debt, drawing demand 2.2 times the amount on offer, above this year's average of 1.9 and the 1.4 ratio seen in September when the bond was launched. "The bonds are very attractive in relative value terms, especially against other sectors of the German curve and there is also some jiggling around Spain so you have some safety demand there," Commerzbank rate strategist Michael Leister said. Other analysts said expectations that the ECB will keep monetary policy loose fore a protracted period and coupon and bond repayment flows have also helped the sale. Bund futures were last 5 ticks lower on the day at 141.33, having traded as low as 141.21 before the auction.

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