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Brighter mood in world markets pushes up euro zone debt yields

* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr

LONDON, Oct 6 (Reuters) - Government bond yields across the euro area nudged higher on Tuesday, pulling away from recent lows as a brighter tone in world markets dented the appeal of fixed income.

Still, with European Central Bank (ECB) president Christine Lagarde and U.S. Federal Reserve chief Jerome Powell scheduled to speak later in the day, trading was largely subdued.

Germany’s benchmark 10-year bond yield was about a basis point higher on the day at around -0.50%. It is up more than 5 basis points from two-month lows hit last week.

News that U.S. President Donald Trump was discharged from hospital following treatment for COVID-19 and prospects for a fresh U.S. stimulus package boosted sentiment in world markets, and in turn weighed on safe-haven debt.

“The lack of key data releases will keep attention focused on Trump’s recovery, following news of his imminent release from hospital late Monday,” analysts at Miuzuho said in a note.

“On the back of this, the risk-on could have further to travel. Any signs of progress on fiscal stimulus talks would also help.”

Most other euro zone bond yields were marginally higher on the day, with Italy’s 10-year bond yield also nudging off recent lows to stand at 0.81%.

Data released on Monday showed the ECB bought less Italian and Spanish government debt in the past two months as market pressure on both indebted countries stayed low, despite a resurgence of COVID-19 cases.

The ECB bond-buying numbers appeared to have little impact on peripheral debt markets, which have been supported in recent weeks by expectations for more ECB stimulus by year-end.

“The PEPP (Pandemic Emergency Purchase Programme) details for the August/September period highlight that the ECB is no longer in acute crisis mode,” said Commerzbank rates strategist Michael Leister. (Reporting by Dhara Ranasinghe; Editing by Alex Richardson)

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