LONDON, Jan 29 (Reuters) - U.S. Treasuries inched lower in
Europe on Friday on rebounding regional shares but investor
jitters about Greece's uncertain fiscal situation meant
Treasuries outperformed benchmark euro zone German government
debt.

 * The European Commission said a European Union bailout of
Greece was not possible, denying earlier newspaper reports of a
rescue plan which had pulled the cost of insuring Greek
government debt against default back from a record high of 422.5
basis points.

 * The fiscal mess in Greece and the risk of contagion for
weaker euro zone countries provided underlying support for U.S.
Treasuries, strategists said. The 10-year U.S. T-note/Bund yield
spread narrowed to 42 bps from 47 basis points at the European
close.

 * "There's a lot of scepticism on the euro area as a whole,"
said Gianluca Salford, a strategist at JPMorgan in London.
* "Some people think it's not only a problem about Greece
but it's more a general problem, and the market is catching up
on this disregarding the fact that countries such as the U.S.
and UK have even greater fiscal challenges than the average of
the euro area. So the U.S. is playing a bit of a safe haven
(role) in the recent move," Salford said.

 * At 1123 GMT, T-note futures were up 2/32 to 117-51/64
TYv1. The benchmark 10-year note yield was one basis point up
at 3.650 percent US10YT=RR while the two-year note yield
US2YT=RR was at 0.883 percent, up two bps from late New York
trade on Thursday.

 * The 30-year bond yielded 4.563 percent US30YT=RR, up one
basis point.

 * After a slew of bond auctions and a Federal Reserve
meeting, the Treasury market also shifts its focus to economic
data on Friday, though stocks may provide more direction.

 
 * Economists expect gross domestic product data due at 1330
GMT to show that the U.S. economy surged at a 4.6 percent rate
in the fourth quarter. ECONUS

 * But this in itself might not undermine safe-haven
government debt too much, because many analysts doubt the
economy has the strength to continue growing that fast this
year.

(Reporting by Emelia Sithole-Matarise;