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German bond yields at 7-month lows as stimulus hopes fade

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

LONDON, Oct 15 (Reuters) - German government bond yields fell to seven-month lows on Thursday as prospects of fresh U.S. stimulus before the presidential election faded while rising coronavirus cases in Europe boosted appeal for safe-haven assets.

Yields on perceived safe-haven German government bonds for 10-year maturities fell 2 bps to -0.594%, the lowest since mid-March. Yields have fallen nearly 7 bps this week.

Downbeat comments from U.S. Treasury Secretary Steven Mnuchin that a stimulus deal was unlikely before the Nov. 3 vote provided one of several reasons for profit-taking.

“Data today is expected to confirm U.S. economic sentiment is deteriorating, U.S. fiscal stimulus remains some way off and a hard Brexit remains likely,” Mizuho strategists said in a daily note.

Also weighing on sentiment was a resurgence in COVID-19 cases in Europe, with some nations are closing schools, cancelling surgery and enlisting student medics.

A rally in peripheral European government debt markets including Italy stalled as investors took profits.

Anticipated support from the European Central Bank has particularly benefited debt from lower-rated Southern European countries, which offer a yield pick-up on the likes of Germany and would benefit the most from the stimulus.

Portugal raised 1 billion euros from an auction on Wednesday, which included eight-year bonds pricing at a negative yield, the first time it has achieved a sub-zero yield on a maturity longer than six years.

Italian 10-year bond yields were trading at 0.659% after falling to a record low at 0.634% on Wednesday (Reporting by Saikat Chatterjee; editing by John Stonestreet)

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