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LONDON, May 17 (Reuters) - The gap between U.S. and German government borrowing costs fell to its lowest level in over six months on Tuesday after a week of tumult at the White House contrasted with signs of stronger integration and growth in Europe.
Reports that Donald Trump tried to interfere with a federal investigation and discussed sensitive security information with Russia has sowed investor fears that he may be distracted from pushing through his economic stimulus programme.
This has even dented firm expectations that the U.S. Federal Reserve will raise interest rates next month. Meanwhile, improving data and ebbing political worries in Europe appear to be supporting calls for tighter monetary policy later this year.
U.S. 10-year yields dropped as much as 4 basis points on Wednesday to 2.29 percent while German equivalents were 2 bps lower at 0.41 percent. At 188 bps, the gap between the two benchmarks was the lowest since November. (Reporting by John Geddie; Editing by Jamie McGeever)