* Cash buffer is after state rescue of BES-debt agency head

* More bond auctions feasible in Q4 (Adds details, background)

By Emelia Sithole-Matarise

LONDON, Sept 30 (Reuters) - The Portuguese government expects to end the year with a cash buffer of 10 billion euros even after a 3.9 billion euro state rescue of Banco Espirito Santo, the head of the debt agency said on Tuesday.

IGCP head Cristina Casalinho said that while there were some concerns about the carry costs of keeping the buffer, it was essential to smooth the country's refinancing profile.

"We will try to do our best in order to come up with a sufficient enough cash buffer to smooth our redemption profile and facilitate our funding through the market and to keep a close eye on the interest bill," Casalinho told an investor conference in London.

She later told Reuters that the cash position at the end of this year took into account the 3.9 billion euros used to rescue BES, once the country's biggest listed lender.

The bank had to be rescued by the state in early August after the collapse of the business empire of its founding Espirito Santo family.

The cash buffer would cover two-thirds of the government's 2015 financing needs, Casalinho said,

She said the agency remained flexible in its debt issuance plans and that it was feasible to conduct a couple more bond auctions in the fourth quarter.

Portugal, which exited an international bailout in May, has sold several bonds by syndication this year, including its first dollar issue in four years.

Casalinho said the sovereign's speculative-grade credit rating was an obstacle to bringing in more long-term bond investors.

Financial markets have shown diminishing concern about Portugal, with its bond yields currently around levels seen before the country was sucked into the euro zone debt crisis in 2011.

Its 10-year borrowing costs hit a record low of 2.95 percent in late August in a rally also encompassing other peripheral bonds on the prospects of further policy stimulus from the European Central Bank.

(Additional reporting and editing by Nigel Stephenson)