July 9, 2018 / 7:53 AM / 4 months ago

Euro zone bond yields creep up, Draghi to speak

* Bond yields edge up

* Mario Draghi speaks to European parliament later in day

* Hefty week for euro debt supply

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

By Dhara Ranasinghe

LONDON, July 9 (Reuters) - Government bond yields crept up in the euro area on Monday, giving up declines seen after Friday’s U.S. non-farm payrolls data, as a stronger tone in world equity markets diminished the appeal of fixed income.

Focus was expected to turn to European Central Bank chief Mario Draghi, who is scheduled to give a statement to the European parliament later in the day.

But for now, euro zone bond markets took their cue from growing risk sentiment globally, with European stock markets open broadly higher.

Having hit a five-week low on Friday after U.S. job numbers revealed tepid wage inflation in June, Germany’s 10-year bond yield rose 1.5 basis points to 0.30 percent.

“It’s mainly coming from the stock market,” said KBC rates strategist Mathias van der Jeugt. “We have Draghi this afternoon and he will stay close to the lines of recent communication, although there is some semantics about the ECB’s forward guidance on rates.”

The ECB said last month that interest rates would stay low through the summer of 2019 and there is some discussion in financial markets as to whether this includes September.

Most euro zone 10-year bond yields were marginally higher, with the exception of Italy, which tends to benefit when demand grows for riskier assets.

In a sign of some reluctance to hold safe-haven German bonds, official data showed Japanese investors sold a net 712.1 billion yen ($6.45 billion) of the bonds in May, their largest net sales in more than a year.

That selling followed a rally in German and U.S. government bonds on political upheaval in Italy in late May.

German 10-year bond yields are down some 50 bps from almost 2 1/2-year highs hit in February, on expectations that interest rates in the euro zone will stay low for some time, slowing momentum in economic growth and trade war jitters that have boosted demand for safe-haven assets.

A weaker tone in most euro zone debt markets on Monday also came as Germany, the Netherlands, Ireland and Italy all scheduled bond sales this week, with the bulk of that issuance in longer-dated maturities.

Reporting by Dhara Ranasinghe, editing by Larry King

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