(Reuters) - Spanish and Italian government bond yields fell on Thursday while German Bund futures extended falls on growing speculation Europe will come up with a solution to tackle Spain's banking crisis. "It's based on hope, rather than actual facts, that there will be a resolution to Spanish bank problems. We might have started to trip some stops in Bunds which were looking extremely stretched. This is just fast money at the moment," a trader said. Italian 10-year government bond yields fell 12 basis points to 5.55 percent while equivalent Spanish yields were down 10 bps at 6.2 percent. Shorter-dated yields also fell before a Spanish auction of up to 2 billion euro of bonds which will be a test of the country's ability to tap investors after a minister said the country was being cut off from markets. German Bund futures fell as much as 66 ticks on the day to 144.00 but traded volumes were miniscule at a mere 15,431 lots.

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