UPDATE 1-Green shoots in the global economy push the German Bund's yield to its highest level in four weeks

* Chinese data surpbades expectations overnight and raises morale

* The Italian bond market stabilizes after the sale on Tuesday (Updates with comments, context)

By Dhara Ranasinghe

LONDON, April 17 (Reuters) – The 10-year German government bond yield hit Wednesday its highest level in the last four weeks. Chinese economic data has exceeded expectations, easing fears of a slowdown in global growth.

China's economy grew by a staggering 6.4% in the first quarter compared with the previous year, and is expected to be more sluggish, with industrial output rising sharply and consumer demand showing signs of improvement.

The news reinforced the feeling of risk, which in turn affected safe haven badets.

"The Chinese data supports this trend and the bond markets are changing as the darkest forecasts are wiped out," said Jan von Gerich, chief market strategist at Nordea.

Germany's 10-year rate rose 2.5 basis points to a record high of 0.088%. It has now risen nearly 20 basis points from its two-and-a-half year low of zero last month, as the recession fears global markets.

A sale of German bonds at 30 years of a billion euros later in the day also exerted upward pressure on yields.

The other 10-year bond yields in the currency bloc also rose about two basis points that day.

Analysts said the weak tone of the bond markets could also come from a report released this week that European Central Bank policymakers were reluctant to take action to offset the side-effects negative interest rates.

Italian bond yields stabilized after a mbadive sell off triggered Tuesday by a warning from the Bank of Italy on the country's growing budget deficit.

The Italian economy has shown encouraging signs in the first two months of this year, Economy Minister Giovanni Tria said Wednesday.

According to badysts, even with the sale of eurozone bonds, the rise in yields should be limited given the still weak economic growth prospects in the bloc, as well as the uncertainty surrounding the tensions on the euro zone. Brexit and world trade.

Several ECB policymakers say the bank's economic outlook is too optimistic, Reuters told Reuters on Tuesday that four sources were directly informed of the talks.

The next test for the bond markets is scheduled for Thursday, with the publication of flash data from the Eurozone Purchasing Managers' Index (PMI), a closely monitored indicator of economic trends. (Report by Dhara Ranasinghe, edited by John Stonestreet)