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* Chinese factories know the best month out of eight
* Eurozone yields go back to last week's low
* The 10-year German yield remains firmly negative
* Bond yields on the periphery of the euro zone tmsnrt.rs/2ii2Bqr (updates with data, price, addition of comment)
By Dhara Ranasinghe
LONDON, April 1 (Reuters) – Eurozone government bond yields rose on Monday, as data on the activity of Chinese factories rebounded and hopes of easing tensions on global trade softened the strength of safe haven markets after the spectacular price rally last month.
Nevertheless, given the extent to which investors' perception of growth and inflation prospects has changed, bond yields have remained well below the levels they had negotiated a month ago. while bloc data showed that growth conditions in the euro area remained weak.
According to a quick estimate, overall inflation and core inflation in the euro area slowed in March.
The latest Chinese data and news that China will continue to suspend additional tariffs on US cars and auto parts after April 1 have somewhat calmed world markets.
The Chinese Purchasing Managers PMI of Caixin / Markit Manufacturing posted the strongest growth in eight months in March, rising from 49.9 in February to 50.8, up from 50 mark following the contraction and at the highest level since July 2018.
"This is a new month, a new quarter, the Chinese PMI has definitely helped to strengthen the sentiment," said Neil MacKinnon, global macro strategist at VTB Capital.
Germany's 10-year benchmark bond yield rose 2.5 basis points to 0.04%, from 2% last week and lower at -0.09%. Other 10-year bond yields on the block rose two to three basis points on the same day.
"Last week, the focus was on central bank forecasts and data, which are showing signs of stabilization," said Commerzbank rate strategist Rainer Guntermann. "For the week, we are seeing Bund yields stay below zero but increase slightly."
A final reading of data on manufacturing activity in the euro area confirmed the poor prospects of the sector.
IHS Markit's final manufacturing PMI for the month of March fell for an eighth month from 49.3 in February to 47.5, just below a flash estimate and reaching its lowest level since April 2013 .
Britain remains at the center of the debate, with Parliament voting for the second time on Monday on various Brexit options. British Prime Minister Theresa May may try to reduce her agreement, rejected three times, to a vote in parliament on Tuesday.
Report by Dhara Ranasinghe
Edited by Mark Heinrich
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