* Country set to raise at least 1 billion euros from sale

* Investor interest tops 6 billion euros overnight

* Deal a major test of demand for duration, bankers say

* Initial marketing levels suggests yield around 2.1 percent

By Abhinav Ramnarayan and Helene Durand

LONDON, Sept 12 (Reuters/IFR) - Austria launched the sale of a 100-year bond on Tuesday after overwhelming investor interest gave its debt officials confidence it could become the first euro zone country to sell a “century” bond publicly through a group of banks.

A successful sale would demonstrate that demand for super-long bonds, whose prices are extremely sensitive to interest rate changes, remains solid even as central banks start winding down their crisis-era stimulus measures.

In the initial stages, Austria is marketing the bonds at a 55-60 basis points premium over its outstanding bonds maturing in February 2047, according to bankers on the deal.

Those 30-year bonds were yielding 1.52 percent on Tuesday morning, according to Tradeweb, suggesting a yield of between 2.07 and 2.12 percent on the century bonds.

“It’s an interesting deal as there hasn’t been a syndicated bond from a eurozone sovereign in this part of the curve before,” said one of the bankers working on the deal. “We’ll be long dead by the time this matures.”

The duration of the bond - a measure of how long it takes investors to recoup their investment - is set to be around 44 years. This would make it the bond with the highest duration in the euro zone government debt market.

Austria is planning to sell the bonds via syndication to help access a wider base of investors. The banks involved are Bank of America Merrill Lynch, Erste Group, Goldman Sachs, NatWest Markets and Societe Generale.

Among euro zone countries, only Ireland and Belgium have previously sold 100-year bonds, both via private placement, where the bonds are sold directly to a small handful of investors or even just one buyer. Those deals were also far smaller, at 50-100 million euros each.

Many euro zone countries have taken advantage of a low-yield environment -- fuelled by extraordinary stimulus measures put in place by the European Central Bank -- to sell long-dated bonds in recent years.

With the ECB now expected to scale back stimulus sooner rather than later, the expectation was that this bid for higher-yielding long-dated bonds would fade.

But even as central banks tighten policy, investors show little sign of retreating from the riskier debt.

Earlier on Tuesday, Austria’s debt management office said it would sell five-year bonds and 100-year bonds for a “benchmark” size, which typically means at least 1 billion euros each, and possibly much higher.

In fact, bankers working on the deal said the indications of interest were over 6 billion euros for the century bonds and over 7 billion euros for the five-year.