* Euro zone yields near six-month lows
* Attention turns to U.S. Friday job numbers
LONDON, Aug 4 (Reuters) - German 10-year government bond
yields slipped below the ECB's policy rate on Wednesday for the
first time in over six months, but edged off those lows towards
close of trade as comments by a Fed policymaker weighed on U.S.
After a plunge in yields in July, borrowing costs have
continued to fall across the euro zone this month and the German
10-year yield, the euro zone benchmark, touched an end-January
low of -0.517%, falling below the European Central Bank's
However, by close, the yield was back at -0.481%, after Fed
Deputy governor Richard Clarida said the U.S. economy was
getting closer to the bar set by the Fed to reduce stimulus.
If his baseline materialized, a reduction in the pace of
purchases was possible later this year," Clarida said.
U.S. 10-year Treasury yields were last up 3.6 bps at 1.21%,
having earlier in the day plumbed a low of 1.127%. That low came
after the Treasury Department said it would keep debt issuance
steady over the coming quarter, but is considering reductions in
U.S. private payrolls also increased far less than expected
in July, the ADP report showed.
Euro zone yields ended the session flat on the day, however,
with French yields near -0.137%, off an earlier low of -0.169%
and Italian 10-year yield, which hit a six-month low
at 0.538%, was at 0.568% towards close.
The euro zone debt market is supported by bets the European
Central Bank (ECB) will keep yields low to support economic
recovery from the pandemic.
"It seems that rates are on autopilot, trying to find the
bottom of this year's trading range," ING Bank analysts said,
adding that "U.S. rates are increasingly in the driving seat of
this rates rally while their German counterparts have struggled
to make new lows."
The 30-year German yield, which sent the whole German yield
curve into negative territory on Monday, was back below 0% at
Citing ECB data released on Monday, analysts have noted that
the average maturity of public sector debt the bank holds under
its Pandemic Emergency Purchase Programme exceeds that of the
universe of eligible bonds for the first time, putting downward
pressure on longer-dated yields.
Final July purchasing managers index survey data published
on Wednesday was slightly worse than expected, but still showed
activity expanding at its fastest pace in 15 years.
U.S. non-farm payrolls data due on Friday is the more
important upcoming data release. Traders say euro zone markets
may take their next cue from the Treasury bond market and its
reaction to the numbers.
(Reporting by Tommy Wilkes and Sujata Rao; Editing by Emelia
Sithole-Matarise and David Evans)