* Bunds underperform Treasuries and gilts post QE
* 10-year Irish bond yield at euro lifetime high
* ECB offers little to halt peripheral widening
By Kirsten Donovan and Emelia Sithole-Matarise
LONDON, Nov 4 (Reuters) - Higher-yielding peripheral bonds were the hardest hit in the euro zone on Thursday after the European Central Bank stayed on track to unwind extraordinary liquidity measures.
Flows out of peripheral euro zone debt supported German government bonds, and the December Bund future FGBLc1 settled higher 19 ticks higher at 130.43 in European trading.
Still, Bunds underperformed U.S. Treasuries and UK gilts since quantitative easing or the possibility of such measures are still in play in the United States and Britain.
That meant the premium which 10-year Treasuries offer over Bunds was almost wiped out.
Irish debt led peripheral bonds lower, with the premium investors demand to hold Irish debt over Bunds and the cost of protecting against a debt default rising to euro lifetime highs before Dublin unveiled its three-year budget plans.
"Trichet didn't hint that the liquidity exit strategy will be extended or anything like that, so there's nothing there for people to feel good about peripheral debt," a trader said.
The two-year Irish bond yielded IE2YT=TWEB a record 5.6 percent and the 10-year spread over Bunds rose to a new euro lifetime high of 543 basis points before the Irish budget details which came after the European settlement close.
Dublin said it was targetting fiscal adjustments totalling 6 billion euros next year to get its budget deficit into a range of 9.25-9.5 percent of GDP [ID:nDUL000068].
"The Irish budget plans and forecasts for the next three years look hugely unrealistic. That seems to have been the trigger. They've got no chance," a trader said.
"TOUGH LOVE"
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