Insatiable demand for peripheral debt as Spain sells 10-year

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr

LONDON, June 12 (Reuters) - Investors were undeterred by the super-low yields offered by Spain in its latest 10-year bond syndication on Wednesday, and piled 31 billion euros of orders into the new deal.

Spain set the final spread at 33 basis points over mid-swaps, according to a lead manager, taking advantage of the strong rally in peripheral debt which has seen Spanish 10-year government bond yields fall 100 basis points since the beginning of the year.

It aims to raise 6 billion euros. At 33 bps, the spread suggests a final yield of just above 0.60% according to Reuters calculations.

Peripheral debt has rallied dramatically this year as investors hunt for yield in a move underpinned by expectations of accommodative monetary policy from both the European Central Bank and the U.S. Federal Reserve, which is keeping euro zone bond yields at all time lows.

Spain last issued a 10-year bond via syndication in January this year, paying a yield of 1.462%.

BBVA, Credit Agricole, Goldman Sachs, HSBC, Santander and Societe Generale arranged the deal.

The deal comes on the same day as one from Italy, which had taken orders of around 16 billion euros for a new 20 year bond on Wednesday. (Reporting by Virginia Furness; Additional reporting by Abhinav Ramnarayan; Editing by Hugh Lawson)