* Lisbon to sell 3 bln euros of 10-year bonds
* US President-elect Trump news conference under way
* Italy court blocks referendum to scrap Renzi's labour
(Adds move in Italian bonds, Trump news conference)
By John Geddie and Dhara Ranasinghe
LONDON, Jan 11 Portuguese bond yields pulled
back from 11-month highs on Wednesday as the country got through
one of its toughest bond sales in years, while safe-haven bond
yields fell as Donald Trump held his first news conference since
Peripheral bonds received an additional boost after a key
court rejected a bid by Italy's biggest labour union to hold a
referendum on recent rule changes that made it easier to fire
workers. Italian yields fell to a one-week low after the ruling.
Wrestling a bank crisis, a sluggish economy and reduced
support from the European Central Bank, Lisbon is poised to sell
three billion euros of a new 10-year bond on Wednesday after
attracting demand of more than 8.5 billion euros.
"If you look at how much issuance Portugal needs to do this
year, and we're looking at around 16 billion euros, that's
already around 15-20 percent of their issuance in one go in this
auction," said Orlando Green, European fixed income strategist
at Credit Agricole.
"That might be what the market is looking at and that may
have given Portugal a small bid today."
Germany sold 4 billion euros of 10-year debt on Wednesday at
its regular auction, with strategists saying demand was
supported by concern about Donald Trump's first press conference
since he won November's U.S. presidential election.
Trump's calls for fiscal stimulus have pushed up inflation
expectations, and with it stocks and bond yields. But his
protectionist statements and jibes at China are considered
potential sources of diplomatic tension that could roil markets.
As the news conference got underway in later European trade,
U.S. Treasury yields fell - pushing safe-haven German bond
yields lower still.
German 10-year yields -- the bloc's benchmark -- fell 4.4
basis points to 0.24 percent, keeping clear of
Monday's 0.325 percent three-week high.
Portuguese 10-year yields fell 7 bps to 3.98 percent
, while Spanish yield were down 6 bps at 1.42
Portugal has been benefiting less than others from the
trillions of euros the European Central Bank has spent buying
bonds, and it is just one ratings downgrade away from being
excluded from the ECB's bond purchases altogether.
Strategists said Portugal's bond sale could ease concern
about a lack of its debt available for the ECB bond-buying
"The new benchmark and the resulting injection of liquidity,
PSPP-related purchases of Portuguese government bonds could well
normalise to some extent, at least in the short term, and unfold
their positive yield-compressing effect," DZ Bank strategist
Sebastian Fellechner said.
Italian yields extended their falls to a one-week low of
1.85 percent after Italy's Constitutional Court
backed the 2015 "Jobs Act" - a flagship project in former
premier Matteo Renzi's bid to breath life into the
The court accepted the CGIL union's proposals for two other
referendums, however - on the use of vouchers to pay workers who
have no contract, and on contracting companies' obligations to
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Larry King)