* Euro zone bond yields fall after Trump news conference
* U.S. bond yields fall to more than one-month lows
* Upbeat data, ECB dissent pushes euro zone yields off lows
* Italy sells 7.25 bln euros of debt
(Updates prices for close)
By Dhara Ranasinghe
LONDON, Jan 12 German bond yields moved further
away from three-week highs on Thursday as U.S. President-elect
Donald Trump's long-awaited news conference offered little
clarity on his fiscal plans, denting "reflation" bets that have
dominated markets recently.
Borrowing costs in the euro area nevertheless nudged off
their lows after data highlighted brighter economic prospects
for the region and European Central Bank minutes showed some
policymakers wanted to rein in the bloc's monetary easing.
Since Trump's election win on Nov. 8, stocks have soared and
bonds have taken a beating on expectations that the economic
policies of a Trump administration would fuel growth and
But at his first news conference since the election, Trump
on Wednesday gave no details on tax cuts and infrastructure
spending, stalling a reflation-driven rise in world bond yields.
"There's no escaping the fact that there is huge uncertainty
about what will actually be implemented in the U.S.," Pictet
economist Frederik Ducrozet said.
Germany's 10-year bond yield, the benchmark for borrowing
costs in the euro area, fell as much as 5 basis points to 0.21
percent, its lowest level in just over a week,
before closing at 0.24 percent. It is down about 10 bps from a
three-week high hit on Monday.
U.S. 10-year Treasury yields fell to their lowest level in
1-1/2-months at around 2.31 percent, while the U.S.
dollar sank to a five-week low against the yen.
Euro zone inflation expectations, measured by the five-year,
five-year breakeven forward, meanwhile pulled back
from a 13-month high hit earlier this month to stand at around
Across the euro zone, bond yields were 2-5 bps lower on the
day, with stronger economic news taking the edge off a rally in
prices. A bond's yield and its price move in opposite
Euro zone industrial output rose by a larger-than-expected
1.5 percent in November from a month earlier, while a
preliminary estimate put Germany's economic growth in 2016 at
1.9 percent - the strongest rate in five years.
The data adds to signs of a pick up in both economic growth
and inflation that suggests the record lows seen in bond yields
last year are unlikely to be revisited in 2017.
HSBC said on Thursday it had revised up its forecasts for
German Bund yields, which it no longer sees falling into
"We have revised our forecast for the 10-year Bund yield
higher by 65 basis points to 0.60 percent at end-Q3 before
falling to 0.35 percent year-end from minus 0.20 percent
previously," the bank said in a note.
Opponents of the ECB's money-printing programme openly
voiced their dissent at the central bank's latest meeting, when
it extended its stimulus programme despite improving economic
conditions, accounts showed on Thursday.
With euro zone inflation rebounding, the ECB is facing
calls, particularly in Germany, to pare back of its 2.3 trillion
euros ($2.46 trillion) bond-buying scheme.
Elsewhere, Italy raised the top planned amount of 7.25
billion euros ($7.7 billion) at an auction of three bonds,
paying lower three- and seven-year yields compared to late 2016
thanks to easing political risks.
A court on Wednesday rejected a bid by Italy's biggest
labour union to hold a referendum on recent rule changes that
made it easier to fire workers.
Italian bonds face another test on Friday, when ratings
agency DBRS is set to announce the results of a review of the
country's credit rating.
(Editing by Catherine Evans and Janet Lawrence)