* Signs of weak demand at Spanish 4.7 bln eur bond auction
* Gloomy global growth outlook adds to pressure on periphery
* ECB keeps rates unchanged, no hints of cuts to come
By Kirsten Donovan and William James
LONDON, Nov 8 (Reuters) - Spanish and Italian debt yields rose on Thursday after signs of weak demand at an auction of new five-year Spanish bonds raised a warning flag for some investors.
The sale, hours before the European Central Bank kept interest rates steady at a record low 0.75 percent, completed Spain's planned funding for 2012 and allows the government to hold out longer before asking for international aid.
Such a request would allow the ECB to buy Spanish bonds but ECB President Mario Draghi, speaking at a press conference after the rate decision, reiterated that any such aid requests were "entirely in the hands of governments".
Spain's 4.7 billion euro debt sale included its first auction of longer-term bonds in 18 months but the wide range of bids accepted for a new five-year benchmark bond drew criticism.
"The five-year sale was awful. I don't think it was good at all," a trader said, highlighting the 9 basis points difference between the highest accepted yield and the average yield - a measure of demand known as the auction "tail".
Spanish 10-year yields rose as much as 14 basis points to 5.86 percent, their highest since mid-October, with yields across the curve rising by a similar amount and fellow struggler Italy's debt also pressured.
"It was always going to be quite difficult to float a new bond in this market, you have to issue a lot to give it benchmark status so the fact it's a long tail shouldn't have been too surprising," a second trader said.
"The bottom line is...they can now start pre-funding 2013 and can argue they still have full access to capital markets and have no need to rush into (a bailout)."
Madrid's borrowing costs sit well below their July peak, when investors appeared to be abandoning the country because of its dire fiscal position.
But the market's goodwill is predicated on Spain asking for a bailout and activating the ECB bond-buying, something politicians in Madrid show little sign of doing soon.
"Rajoy said recently he was fine with the current (borrowing) levels and the Tesoro can sustain these levels for a longer period of time," said DZ Bank strategist Christian Lenk.
"But, given the recent widening of spreads and the 10-year yields of the bonos (Spanish bonds) creeping back to the 6 percent level you see that the ECB effect is fading away."
Italian 10-year yields were up 8 bps at 5.00 percent as a risk-filled global backdrop also added to pressure on the euro zone's lower rated issuers.
Draghi said economic activity in the euro area was expected to remain weak but did not give any indication that the central bank was considering cutting its main refinancing rate further from its current 0.75 percent.
Signs that the economic slowdown in the euro zone's periphery is spreading to powerhouse Germany has been a supporting factor for Bunds, while there are also concerns about the "fiscal cliff" in the United States, adding to demand for lower-risk assets.
President Barack Obama is facing a political showdown with a divided Congress over $600 billion in expiring tax cuts and spending reductions due to take effect in January, with some analysts warning the cuts could hit the U.S. economy hard.
"The global environment has turned favourable for core bond markets and the EU forecasts for next year are rather gloomy. That's why we saw some (peripheral euro zone bond) risk-off moves," Patrick Jacq, a strategist at BNP Paribas, said.
Bund futures were 15 ticks higher at 142.90, just off two-month highs hit earlier in the day.