* Eurogroup meeting fails to agree bailout deal
* IMF needs more realism from euro zone on Greece, official
* Manchester attacks, fresh Trump allegations cap bond
* Euro zone private sector growth maintained in May
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Abhinav Ramnarayan
LONDON, May 23 Greece's short-dated government
bond yields rose sharply in early trade on Tuesday after its
chief creditors failed to agree a debt relief deal.
Greece needs new cash from the euro zone to avoid a default
in July when it has to repay some 7.3 billion euros of maturing
To get the money, the Greek parliament approved pension cuts
and tax hikes on Thursday. However, euro zone finance ministers
concluded that Athens still had to take further measures.
"Given the way negotiations have been progressing in the
past, another delay should not come as a surprise - but this
time hopes were running high (for a deal) because of the
measures passed by Greece," said ING strategist Benjamin
The International Monetary Fund needs to see more realistic
euro zone assumptions about Greece's economy and more detail on
planned debt relief measures to join a bailout, IMF's European
Department head Poul Thomsen said.
Yields on Greece's short-dated government bonds
rose 37 basis points to 5.90 percent. Ten-year yields also rose
17 basis points on the day.
The move comes after weeks of optimism that an agreement on
aid would go through. The yield on Greece's 10-year bond, which
reached a peak of over 15 percent in February, fell to below 5
percent last week.
Greek government officials have been discussing with banks
the possibility of returning to the bond market as early as July
this year to try to meet some of its debt obligations.
The head of the Eurogroup of finance ministers, Jeroen
Djisselbloem, said ministers hope to reach a deal at the next
meeting on June 15.
Most other euro zone bond yields dipped in early trade as
investors retreated to the safety of government bonds after a
suicide attack in Manchester killed at least 22 people, and with
fresh allegations emerging over possible collusion between
Russia and Donald Trump's presidential election campaign.
But this move reversed as the session wore on and yields
were hovering around Monday's closing levels after French and
German private sector growth pointed to a solid second quarter
for the euro zone's biggest economy.
Purchasing managers' index data for the euro zone as a whole
also suggested sustained economic momentum.
"The risk-off environment is already erased and we are back
to the levels we saw yesterday on the back of the very bright
economic outlook," said DZ Bank analyst Rene Abrecht.
"We still have to see some positive signs in the economy
before there is a concerted move in yields, though."
Germany's 10-year government bond yield, the benchmark for
the region, was marginally higher at 0.4 percent, having hit a
low of 0.37 percent in early trade.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Andrew Heavens)