* Investors renew bets on a Greek bailout deal * Markets cautious due to risks of further accidents * Commerzbank recommends taking profits on peripheral rally By Marius Zaharia LONDON, Feb 17 (Reuters) - German government bonds fell on Friday on indications Greece will secure a long-delayed second bailout next week, but the scope for further losses was limited as the risk of a disorderly Greek default could not be ruled out. Lower-rated Italian and Spanish bonds gained, but some analysts doubted the rally would continue for much longer given the euro zone's persistent problems. Debt issued by Portugal, seen by many as the next country that could be forced to restructure its debt, underperformed. Euro zone officials said on Thursday they were putting the finishing touches to a Greek bailout deal for approval on Monday. That would pave the way for Athens to finally proceed with a bond swap whereby private creditors would give up some 70 percent of the value of their Greek bond holdings, reducing Athens' 350 billion euro debt pile by about 100 billion euros. The bailout money will be disbursed only after the debt restructuring takes place. Some jitters remain due to a tight schedule, with Greece needing to secure the funds before March 20, when it has to pay back debt worth 14.5 billion euros. Even if Greece avoids a disorderly default in March, markets are unlikely to jump on riskier assets with too much enthusiasm due to concerns over the implementation of the bailout terms and the solvency of other euro zone countries. "We have to wait for what happens next, I see little scope for a big move, there are uncertainties of all kinds," said Piet Lammens, a strategist at KBC. "We have seen in the past few days several swings in sentiment. The Greek issue needs to be eliminated to see a move further down in the Bund." Bund futures were 28 ticks lower on the day at 138.77, having gone as low as 138.51 during the session. One trader said Bunds were unlikely to dip below this year's 137-140 range in the near term. A break below the mid-point of the recent Bund rally at 138.26 would open the door to last Thursday's low of 136.93, said UBS technical strategist Richard Adcock, who recommends flat positions for now. UNCERTAINTY STILL HIGH Bond prices were influenced mainly by short-term investors and further headline-driven volatility was likely until developments in the euro zone debt crisis became easier to anticipate, traders said. Commerzbank strategist Rainer Guntermann said Bund yields , last steady at 1.89 percent, may struggle to rise above the psychologically important 2 percent level in the near term, and even if they did, they would not trade much above it. "Some implementation risks remain, the PSI detail would be important and ... also the risk of PSI down the road (in other countries)," Guntermann said. "There are still arguments for yields to be capped on the upside." Bund yields could rise above 2 percent if the rally in peripheral bonds continued, he added, but at the same time he recommended investors to use the renewed demand for such paper as an opportunity to take profits on their long positions. Short-term Italian and Spanish debt yields have more than halved since the European Central Bank injected almost half-a-trillion euros into the banking system in late December. Banks will be able to access more cheap three-year loans in a second ECB operation at the end of this month. However, some analysts say that would not necessarily spur further gains in peripheral bonds as the current rally may have been driven by investors already positioning for a high take-up. Others believe the rally would continue. "I am upbeat. On a time horizon of a few months there is ground to be more optimistic, the monetary policy everywhere is extremely easy," KBC's Lammens said. Lloyds strategists said a negative result at Monday's euro zone finance ministers meeting was still possible and that an additional delay to the Greek PSI deal would spark a selloff in peripheral bonds and send Bund yields towards the Nov. 2011 lows of 1.72 percent.

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