HOUSTON, Aug 29 (Reuters) - A defaulted Venezuelan bond

collateralized with equity in U.S. refiner Citgo Petroleum rose

1.125 cents on Friday to a four-month high of 97.25 cents on the

dollar, while shares of miner Gold Reserve ( GDRZF ) rallied 18%

in Toronto from Thursday's close, a sign that two frontrunners

in an auction for the Venezuela-owned refiner are expecting to

prevail.

A group led by Gold Reserve ( GDRZF ) and a rival affiliate of hedge

fund Elliott Investment Management are competing neck-in-neck in

a court-organized bidding round for the refiner, a process that

is expected to lead to a change of ownership in the seventh

largest U.S. refiner.

A court officer overseeing the auction is set to recommend a

winner on Friday, or request more time to evaluate the bids. A

final decision is expected to be made by a Delaware judge next

month.