* Yields rise on syndication talk after solid bond sale
* ECB easing bets to support Bunds, narrow spreads
* Greece sets hopes on end-2014 return to debt market
By Marius Zaharia
LONDON, May 9 (Reuters) - Spanish government bond yields rose on Thursday on talk the country was planning a syndicated deal in the near future.
Spain sold slightly more than planned at a triple-bond sale where borrowing costs dropped sharply from a previous auction. Demand was slightly weaker but analysts and traders said it still looked healthy and was no reason to sell the paper.
"The auction went OK, but there are rumours of a syndicated deal next week," one trader said. "So there is a lot of supply in a short period of time and we also believe Spanish yields have fallen far too far, far too fast."
Spanish authorities were not immediately available for comment.
The country's 10-year bond yields were 8 basis points higher on the day at 4.19 percent, compared with around 4.10 percent before the auction.
They have fallen from about 7.8 percent in mid-2012, before European Central Bank President Mario Draghi said he would do whatever it took to save the euro, to 2-1/2 year lows of 3.95 percent last week.
Expectations that the European Central Bank will ease policy further after it cut its key rate last week to 0.50 percent are anchoring German 10-year yields near record lows and pushing investors towards higher-yielding assets to maximise returns.
Some analysts say the trend of narrowing yield spreads between German Bunds and the rest of the euro zone debt is likely to resume as no major central bank is expected to shift away from an ultra-easy policy stance any time soon.
"There is a lot of liquidity in the market offering support for the periphery," UniCredit strategist Luca Cazzulani said.
Bund futures, a safe-haven asset that throughout the financial crisis has usually weakened when appetite for riskier assets picked up, were last 30 ticks higher at 146.15.
"Bunds are cheap given the rate outlook," a second trader said.
BUSY MAY FOR PERIPHERAL DEBT
Speculation of a Spanish syndication deal was also fuelled by the success other lower-rated euro zone sovereigns have had this month in borrowing on markets.
Portugal found strong foreign demand for its first 10-year bond sale since its bailout in 2011 on Tuesday, while Slovenia managed to borrow $3.5 billion to stave off a bailout last week, just two days after Moody's downgraded it to junk status.
Greece, bailed out with some 200 billion euros in loans since May 2010 and having restructured its debt last year, hopes to come back to the market around the end of 2014, its finance minister said.
"It is a scenario, but it's not my base scenario," said Gabriel Sterne, an economist at distressed debt brokerage Exotix. "It depends whether the decline in yields ... translates into growth for the real economy."
"The market comeback has become the slogan of the euro zone crisis. But even with the low rates on the troika loans there are questions about their debt sustainability. Why would they replace those with market rates at 6 percent?"
Greek 10-year yields were 18 bps lower on the day at 9.48 percent, having hit a post-restructuring low of 9.44 percent earlier in the session. In June 2012, at the height of market fears that the country might leave the euro zone, its yields topped 30 percent.
