LONDON, Aug 1 (Reuters) - Greek bond yields slipped on Friday, slightly outperforming other lower-rated euro zone bonds as investors anticipated a credit ratings upgrade from Moody's later in the day.
Moody's has an extremely speculative Caa3 rating on Greece, the worst in the euro zone. It is scheduled to review the rating on Friday. Any announcement will come after the market closes.
Some market participants say an upgrade looks possible. Greece's economic outlook has improved and its held two successful debt sales this year, after its 2012 default.
Moody's one-notch upgrade of Portugal's ratings despite the problems facing its biggest bank fuelled expectations of similar action for Greece.
Greek 10-year bond yields were down 2 basis points at 6.04 percent, bucking the upward trend on other lower-rated debt. Their yields were 1 to 4 bps higher on the day.
"Moody's is still a lagging the other rating agencies, so a bit of a catchup upgrade for Greece by about up to two notches is very possible," said Rainer Guntermann, a strategist at Commerzbank. "It won't come as a big shock to the market, but as always with official confirmation some accounts may feel more comfortable in adding to their positions (on Greek bonds)."
Italian and Spanish 10-year yields were up 4 bps at 2.73 and 2.55 percent respectively. Investors were cautious before a U.S. jobs report that may shed light on when the Federal Reserve will end its ultra-easy, risk-friendly monetary policy.
U.S. non-farm payrolls, due at 1230 GMT, were forecast to show 233,000 jobs were added last month and the unemployment rate held steady at 6.1 percent.
Some traders said the market was already positioned for a strong figure and would need to see a big number - 250,000 and above - for a durable upward move in U.S. Treasury yields.
The effect of potentially higher U.S. yields on euro zone bonds should also be tempered by Thursday's report on inflation in the region, which fell to its lowest in almost five years in July.
"If expectations for the Fed's gradual normalisation in policy do indeed pan out, then there is, we feel, a strong argument to suggest that not only will core euro yields remain well bid, but that the higher-yielding peripheral market will see even greater demand," Rabobank strategists said in a note.
"Yield hunters (will) look to a corner of the rates world that is, for the time being, going to remain very much supported by an ECB that is very much on a mission." (Editing by Larry King)