UPDATE 2-Greek govt bond yields hit six-month lows after bond sale

Greek bond yields dropped sharply on Wednesday, set for a fifth straight day of falls, following a successful five-year bond sale -- Greece's first since exiting its bailouts last year. Greece's 10-year government bond yield fell more than six basis points to a low of 3.915 percent, its lowest level since August 1, before closing slightly above that at 3.927 percent.

Meanwhile, Greece's five-year government bond yield hit a six-month low of 2.928 percent. A vote by the Greek parliament last week cleared a path for Greece's northern neighbour Macedonia, under its new name, to join NATO, and paved the way for this week's five-year bond sale by Greece.

The bond issue, yielding 3.6 percent and the country's first since its third international rescue package ended in August, attracted investor orders worth four times the issue's size, government officials said on Tuesday. "In terms of rationale, right now, when you adjust spreads by volatility, Greece offers a chunky pick up versus Bunds," BBVA bond strategist Jamie Costero said.

He added that the volatility-adjusted spread of Greece was double that of Spain and more than double Italy's. Greek 10-year government bonds offer a spread of 369 basis points over the 10-year German Bund, seen as the risk-free benchmark for the region, versus 104 basis points for Spain's 10-year bond spread.

PAUSE FOR BREATH Broader euro zone bond yields held firm on Wednesday after British lawmakers voted down a proposal in parliament that aimed to prevent a potentially chaotic no-deal Brexit, which markets appear reluctant to price in.

Core bloc bond investors paused for breath following the vote, and ahead of key euro zone data, the U.S. Federal Reserve press conference, and the resumption of U.S.-China trade talks, all due later on Wednesday. British lawmakers on Tuesday instructed Prime Minister Theresa May to reopen a Brexit treaty with the European Union to replace a controversial Irish border arrangement -- and promptly received a flat rejection from Brussels.

At the same time, parliament rejected a proposal to stop a potentially chaotic no-deal exit by making May ask Brussels for a delay if she cannot get a deal past lawmakers. BREXIT FANTASY

The euro zone bond market has grown a little immune to Brexit noise, said Christoph Rieger, rates strategist at Commerzbank. "Given the UK amendments and what (European Council President Donald) Tusk said, this combination increases the risk of a disorderly Brexit. The market is reluctant to price this scenario," Rieger said.

"The market still maintains its faith that reason will prevail. This morning, it looks quite a fantasy to come up with such a scenario." Investors bought German Bunds in the run-up to Tuesday's vote. German 10-year Bund yields were last trading at 0.186 percent, close to levels traded late on Tuesday.

British 10-year government bond yields fell 2 basis points to 1.25 percent. Euro zone bond yields were largely unchanged, , even though Goldman Sachs and others, saw the chance of a no-deal Brexit increasing.

(Reporting by Virginia Furness; Editing by Catherine Evans)