(Updates with Spanish, French bond auction results, detail)
By Emelia Sithole-Matarise
LONDON, Jan 8 (Reuters) - Spanish bond yields headed down on Thursday after 2015 debt sales got off to a solid start as investors bet the European Central Bank will soon announce new monetary stimulus.
Yields on bonds from the euro zone periphery rose from record lows this week, helping to attract yield-hungry investors especially to the longer-dated bonds Spain and France offered at the auction.
A grab for yield drove most euro zone bond yields to record lows at the start of the year. It is accelerating as bets firm that the ECB will open a programme of government bond purchases -- quantitative easing -- as soon as its Jan. 22 policy meeting.
That helped Ireland to sell bonds at record low rates on Wednesday, shielding it from the effects of a selloff in Greek bonds. Investors are worried that Greece may quit the euro zone after a Jan. 25 election that could bring the anti-austerity Syriza party to power.
Spain sold 5 billion euros of 2020, 2028 and 2037 bonds -- the upper end of its targeted range, while France raised 9.49 billion euros at an all-time low for 10-year rates, as both countries began their 2015 funding programmes. [
Spanish 10-year yields were down 2 basis points at 1.70 percent after the sale, having fallen to a record low of 1.495 percent on Friday.
"The Spanish bond market has been pretty resilient despite the surge in Greek bond yields but the scope for a renewed fall in yields is going to be limited as supply is absorbed and investors await the ECB meeting in a couple of weeks," said Nick Stamenkovic, a strategist at RIA Capital Markets.
"If the ECB delivers in two weeks' time, as I think it will probably have to now particularly after yesterday's inflation figures, then we will see scope for a renewed rally in Spanish and Italian bonds near term."
GREEK RESPITE
Italian and Portuguese yields also fell on expectations ECB bond purchases were imminent, after data on Wednesday showed euro zone prices fell for the first time since 2009. A slump in German industrial orders in November reinforced QE bets.
Portuguese 10-year yields were down 3 bps at 2.68 percent . Italian equivalents were 2 bps lower at 1.90 percent.
The selloff in Greek bonds eased after German Chancellor Angela Merkel played down the chances of a Greek exit from the euro zone, although she made clear she expected Athens to stick to the terms of its bailouts.
The ECB also warned on Thursday that Greek banks' access to ECB funding beyond February depended on Athens successfully completing a final bailout review and reaching a deal on a follow-up plan with its EU/IMF lenders.