(Refiles to fix spelling of bloc in paragraph 3)

By Yoruk Bahceli

Futures contracts tied to bonds issued by the European Union look increasingly likely to be launched next year as the bloc's outstanding debt grows, an EU official said on Thursday, a step that would significantly boost trading in these securities.

The EU has become one of the world's biggest bond issuers in less than three years after setting out to raise up to 800 billion euros ($842.80 billion) in common debt by 2026 to finance a post-COVID recovery fund.

The bloc has boosted efforts this year to raise the profile of the EU bonds so that it is treated by financial markets as a government borrower.

The EU official said that 500 billion euros of outstanding debt was seen by the markets as the amount needed to create a big enough bond market that could support a futures contract.

"We will reach this number in 2024, so this requirement would be fulfilled next year," he said.

Futures contracts are derivatives through which investors can buy or sell underlying securities at a future date, allowing them to hedge their positions.

The world's biggest bond markets, including U.S. Treasuries and German Bunds, are supported by futures markets, considered key tools to deepening their breadth and liquidity.

Deutsche Boerse's derivatives exchange Eurex has been working to launch futures for EU bonds since 2021.

Asked about the timing of a launch, a Deutsche Boerse spokesperson said: "We have moved from if to when, which is driven by us closely working with all key stakeholders to determine when is the right time to launch EU bond futures."

In a separate effort to boost demand for its debt, the European Commission funding team will get in touch with bond index providers by the end of the year, the EU official said, to argue that its debt should be included in major benchmarks for government issuers.

Reuters reported exclusively in April that the EU was preparing to approach the index providers for inclusion in the indexes, a move that would attract steady demand from a much bigger pool of global investors and lower its borrowing costs.

The decision to move forward with the discussions follows an investor survey over the summer, which showed that inclusion in the indexes would "significantly" boost demand for the EU's debt for nearly 50% of respondents.

($1 = 0.9492 euros)

(This story has been refiled to fix the spelling of 'bloc' in paragraph 3)

(Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe and Jane Merriman)