LONDON: Euro zone government bond yields moved further off multi-month lows on Tuesday as manufacturing surveys from the bloc's largest economies showed that expansion remains broad-based.
Government debt across the single currency bloc has been in demand on concerns over a potential trade war between the United States and other major economies.
But solid economic data has taken the edge off the rally.
Though a Purchasing Managers' Index (PMI) survey showed the bloc's manufacturing boom stumbling in March, output was robust.
Manufacturing surveys from the four largest euro zone economies also showed expansion, even if the Italian and German PMIs were slightly below expectations.
"We had a strong phase of economic acceleration late last year, this has eased somewhat in the first three months of the year so that's why you are seeing the PMIs still healthy but not as strong as they were a few months ago," said Mizuho strategist Antoine Bouvet.
Euro zone bond yields rose 1-2 basis points across the board.
The yield on Germany's 10-year government bond, the benchmark for the bloc, was up 2 bps at 0.51 percent, having hit a 2-1/2 month low of 0.473 percent last week.
Bouvet attributed some of this to profit-taking, after a strong rally in bond prices in March, when 10-year Bund yields dropped nearly 17 bps.
"The outlook for rates is still fairly benign but over a short period of time it makes sense we get this pullback," he said.
Earlier in the session, bond yields had dipped as a global stock market sell-off led by US tech giant Amazon sparked interest in safe-haven assets.
Shares of Amazon.com Inc fell 6 percent on Monday after US President Donald Trump attacked the online retailer over the pricing of its deliveries through the US Postal Service and promised unspecified changes.
Ten-year US Treasury yields dropped to a near two-month low of 2.71 percent on Monday.
"The big question is how far the current tremor in the equity market will affect bonds given it is driven by a single company - even if it is a tech giant having a huge market weight," said DZ Bank strategist Christian Lenk.
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