* German 10-year yields comfortably above 0.40 pct mark
* China easing pushes up stocks, reduces safety bid
* U.S. economy optimism pushed UST yields towards 3 pct
* Euro zone PMIs could pull yields lower again
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Abhinav Ramnarayan
LONDON, July 24 (Reuters) - Germany’s government bond yields hit five-week highs on Tuesday as the potential for fiscal stimulus from China and strong corporate earnings from the United States boosted risk sentiment.
Euro zone government debt has benefited from a flight-to-safety trade in recent weeks because of concerns around how trade tensions would affect global growth.
But with some positive headlines adding to a possible monetary policy tweak in Japan, German 10-year yields — which move inversely to price — went above 0.40 percent for the first time in over a month and hit a five-week high of 0.416 percent on Tuesday.
“Global stocks, Asian stocks in particular have seen a boost from (potential) policy-easing measures in China and this helps the general risk sentiment and adds to some of the headwinds to bond markets,” said Commerzbank strategist Rainer Guntermann.
“Also, there is a repricing in U.S. Treasuries, so you may add the argument that corporate earnings and a strong U.S. economy are also contributing,” he said.
China will adopt a more vigorous fiscal policy to help tackle external uncertainties without resorting to strong policy stimulus, state radio said on Monday, citing the cabinet.
Elsewhere, Alphabet Inc on Monday reported that expenses from its Google search business grew more slowly in the second quarter while revenue rose more steeply than analysts had anticipated, boosting profit above Wall Street targets and pushing shares up 3.6 percent after hours.
European stocks opened higher across the board, with the Eurostoxx 50 Futures up 0.3 percent.
Other high-grade euro zone government bond yields were also higher on the day, with 10-year French government debt hitting a near-one-month high of 0.73 percent, up 1.5 bps on the day.
Most euro zone yields were higher by 1-3 bps, while 10-year U.S. Treasury yields pushed further towards the 3 percent mark and were last at a five-week high of 2.96 percent.
Yields have also been pushed higher by reports over the weekend that the Japanese central bank was debating moves to scale back its massive monetary stimulus.
Commerzbank warned that some of the move higher in yields could be scaled back as the session wears on if euro zone Purchasing Managers’ Index data proves weaker than expected and points to slowing growth in the bloc.
PMI surveys are due out for Germany at 0730 GMT and for the bloc as a whole at 0800 GMT.
Already French business growth eased more than expected in July as a fall in export orders kept manufacturing from catching up with the stronger service sector, a monthly survey showed on Tuesday. (Reporting by Abhinav Ramnarayan Editing by Keith Weir)