* Bunds lead higher-rated euro zone bonds up on Bernanke
* Bernanke says options open on stimulus cut
* German yields off late June highs, could fall further
By Emelia Sithole-Matarise
LONDON, July 17 (Reuters) - German Bunds led a rally in higher-rated euro zone bonds on Wednesday after U.S. Federal Reserve Chairman Ben Bernanke said the central bank's plans to pare monetary stimulus was not set in stone.
Bernanke told lawmakers that while the Fed still expects to scale back its bond purchases later this year, it left the door open to changing the plan if the economic situation deteriorated.
Bunds tracked U.S. Treasuries higher, bouncing from the day's lows hit after minutes to the Bank of England's July 3-4 meeting showed policymakers surprisingly voted unanimously against more bond purchases.
"If tapering does kick off in September he is emphasising that it's going to be some time before we can see any actual tightening. He is backing up what we saw in the minutes to the last Fed meeting," ICAP strategist Philip Tyson said.
"We've seen a bit of a recovery taking place in the last few days in the bond market and that potentially has room to continue if some of the activity data and second quarter numbers do moderate a little bit."
Bund futures rose 25 ticks on the day to settle at 143.94 with 10-year cash yields 1.5 basis points down at 1.54 percent.
German 10-year yields have fallen 30 basis points from more than one-year highs hit in late June as global bond yields backed up after Bernanke first signalled that the Fed could trim its stimulus later this year. They are still almost 40 bps above this year's lows of 1.153 percent plumbed in May.
While Bunds slightly lagged gains in U.S. Treasuries, market participants still predict German debt will outperform in coming months with European Central Bank policy remaining ultra-easy as the Fed starts scaling back stimulus later this year.
The 10-year T-note yield premium over Bunds was about 6 bps tighter on the day at 94 bps <DE10YT=RR), but market participants saw it back above 100 bps by autumn, closing near 7-year highs around 104 bps briefly touched on Monday.
French, Dutch, and Belgian yields were about 1.5 basis points down on the day, while lower-rated debt yields were slightly up.
Ten-year Spanish debt yields rose 3 bps to 4.69 percent as traders pushed for cheaper prices before a sale of up to 3 billion euros in bonds on Thursday. The Italian equivalent was 2.5 bps higher at 4.50 percent.
The market shrugged off for now simmering political tensions in Spain. Opposition Socialists said on Tuesday they would call a symbolic vote of no-confidence against Prime Minister Mariano Rajoy if he refused to appear before Parliament to answer questions about a deepening scandal over party financing.
In Portugal, one-year borrowing costs jumped to their highest since last October at a Treasury bill auction as a simmering political crisis threatened to derail the country's planned exit from its bailout next year. Ten-year Portuguese yields were 9 bps lower on the day in an ultra-thin market at 7.21 percent.