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Euro zone debt broadly higher after U.S Congress deal

* Euro zone bonds rise across credit spectrum after deal

* Temporary nature of deal a worry, seen delaying Fed tapering

* Spain and France to sell bonds

By Ana Nicolaci da Costa

LONDON, Oct 17 (Reuters) - Euro zone debt rose across the credit spectrum on Thursday as some investors bet a temporary deal to avoid a U.S. debt default would delay any move by the Federal Reserve to scale back bond-purchases.

In an erratic response to the deal approved by the U.S. Congress, Asian and U.S. stock markets rose overnight but European stock markets opened lower.

The short-term nature of the deal to some extent tempered relief that a historic default had been avoided for now.

The deal does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats, funding the government only until Jan. 15 and raising the debt ceiling until Feb. 7.

"They have kicked the proverbial can down the road and U.S. fiscal negotiations will restart early next year. Consequently it's going to be very difficult for the Fed to taper at that time," Nick Stamenkovic, bond strategist at RIA Capital Markets said.

"As a result the market is increasingly confident that a reduction of QE (quantitative easing) is unlikely to be on the agenda until well into 2014. So that's given Treasuries a boost and that's filtered through to Bunds."

German Bund futures jumped 52 ticks to 139.43, pushing 10-year German yields 4.5 basis points lower to 1.89 percent.

They played catch-up to U.S. yields which have fallen more than 10 basis points from the previous day's highs. U.S. yields were down 3.3 basis points at 2.64 percent.

The yield spread between ten-year U.S. Treasuries and equivalent German Bunds tightened 5 basis points to 75 bps.

"Is it good that they have got a deal out of the way for Treasuries? I suppose it is (because) they are not going to go bust," one trader said. "It's only a short-term thing, it runs out in January, February time."

Other highly-rated euro zone debt was also higher.

Ten-year Dutch yields were 3.8 basis points down at 2.26 percent, Austrian yields eased 4.2 bps to 2.27 percent and equivalent French yields fell 3.8 basis points to 2.40 percent, even as investors awaited a French bond sale.

France is set to sell 6.0-7.0 billion euros of fixed-rate, medium-term bonds and 1.0-1.5 billion euros of inflation-linked bonds at an auction later.

Riskier periphery bonds also rose with ten-year Italian yields down 2.5 basis points at 4.22 percent.

Spanish yields were flat at 4.30 percent before an auction of three-year and five-year paper.

"The overall appetite for risk has improved and that's clearly supportive for the likes of Spain and Italy," Stamenkovic added.