By Marius Zaharia
LONDON, April 24 (Reuters) - German Bund yields dipped on Friday but were on track for one of their biggest weekly rises of the year as diminishing fears of an imminent Greek default reduced appetite for safe haven assets, though ECB buying still supports.
Greece offered concessions on Friday on some key reforms demanded by international lenders in exchange for new funding for the country as Athens' coffers are quickly drying out. German Chancellor Angela Merkel said on Thursday everything must be done to prevent Greece running out of cash.
Policymakers from the two countries spoke of "progress" and "constructive" talks, but euro zone finance ministers meeting in Riga on Friday were not expected to make decisive progress on a new deal.
Fears of an imminent Greek default have diminished as Athens has been tapping into public reserves in temporary transactions and has ordered various state entities to park idle cash with the central bank.
This has encouraged investors to sell top-rated Bunds and buy higher-yielding peripheral debt, traders said.
German Bund yields were down 1 basis point at 0.15 percent. At the open they traded as high as 0.17 percent, which would have set them on track for their biggest weekly rise of the year.
"This week's rise has been driven by developments in Greece," said Christian Lenk, rate strategist at DZ Bank.
"There is no major danger lying ahead of us in the next few weeks, but Bund yields have returned due to the most important fundamental factor in the market - the ECB programme."
The current 7.3 basis points rise for the week is a tad lower than the 7.8 bps recorded in the first week of February. Any rise bigger than 2.5 bps would make it the third worst week of the year for Bunds, which seemed on an unstoppable route towards zero last week, when they hit a record low of 5 bps.
Some analysts still expect Bund yields to fall to zero and even below.
The German IFO business sentiment survey later in the day might push Bund yields further down if it mirrors the below-expectations Markit manufacturing and services PMI data. But the euro was up against the dollar with currency traders citing expectations of a slight improvement in the numbers.
(Reporting by Marius Zaharia)