* Slow progress on Spain bailout unsettles investors
* Short-dated bonds vulnerable to selloff in near-term
By William James
LONDON, Sept 18 (Reuters) - German Bunds rose at Tuesday's open as growing unease over slow progress towards a possible Spanish bailout request pushed some investors to buy back into safe-haven assets after a recent sharp selloff.
Bund futures were 27 ticks higher at 139.27, adding to a small rise on Monday and climbing further away from the 5-1/2 month lows seen earlier in the previous session.
"I was surprised Bunds didn't do better yesterday given what was going on in the periphery but Spain remains under pressure... there's a lot of people out there not really sure what to do," a trader said.
Earlier this month the European Central Bank made a landmark pledge to make unlimited purchases of bonds issued by troubled euro zone states, in what was seen a major step towards addressing the region's three-year debt crisis.
However, a condition of the support was that a country must first make a request for aid from the region's rescue funds, and Spain has so far appeared reluctant to give up the fiscal sovereignty required by such a scheme.
"We're now in a waiting game, waiting for stronger signals from Spain ... the plan will only really work if Spain signs up to some form of credit line agreement," said Rabobank senior market economist Elwin de Groot.
"The short end of the curve has already almost fully priced in this scenario, the risk there now is in the short term we see a deterioration in those market."
Spanish debt has rallied in all maturities but especially bonds that will fall within the one to three year scope of the ECB buying. Spanish two-year yields fell from around 7 percent to less than 3 percent, but have since risen back to 3.44 percent
Ten-year Spanish bond yields rose back above the 6 percent barrier on Monday, and the focus will remain on Madrid going into an auction of 12- and 18-month bills due around 0830 GMT.
Demand for the short-term paper was expected to be solid, supported by potential future ECB buying, but any sign of weakness would cast doubt on more difficult sales of longer-term bonds on Thursday.
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