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German Bund Yield Edges Back to 5-Month Lows, Stocks Wobble

LONDON, July 26 (Reuters) - Germany’s benchmark 10-year bond yield edged back towards a recent five-month low on Monday, as a sell-off in world stock markets bolstered demand for safe-haven sovereign bonds.

U.S. Treasuries also rallied, pushing their prices up and yields lower, as Asian shares skidded to their lows for this year. Concerns over tightening regulations upended Chinese equities.

In early trade, Germany’s Bund yield touched -0.43% , within striking distance of five-month lows hit last week.

It was last down 2 basis points on the day, with 10-year yields in most higher-rated euro zone states down a similar amount .

Yields across the single currency bloc have fallen sharply this month as a resurgent Delta COVID variant fuels uncertainty over the global economic growth outlook and investors bet that both world growth and inflation may have peaked.

Germany’s Ifo sentiment survey, released later on Monday, was in focus for the latest clues on the economic outlook.

“Risk sentiment and the flow pattern provide near-term support for Bunds while a rising Ifo index together with the buoyant CPI trend in Germany limit the upside (in prices),” said Commerzbank rates strategist Rainer Guntermann.

Elsewhere, Italy’s 10-year bond yield fell to 0.62% , touching its lowest level in almost four months.

The European Central Bank last week pushed out the timing of any rate hike, which is now off the table until inflation is within sight of its 2% target.

Its dovish stance has also bolstered euro zone bond markets -- Italian 10-year bond yields are down 20 bps so far this month, while German peers have tumbled 23 bps.

(Reporting by Dhara Ranasinghe; Editing by Ana Nicolaci da Costa)

Source: Reuters

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