* Geopolitics rattles financial markets
* German Bund yields drop below 0.20 pct
* French election also frays investor nerves
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By John Geddie
LONDON, April 11 Safe-haven German Bund yields
dipped below 0.20 percent for the first time in more than five
weeks on Tuesday after the United States said it may authorise
more strikes on Syria in a move that would escalate tensions
Across global markets, assets seen as low risk such as
highly-rated debt, gold and stable currencies like the Japanese
yen were in demand, while stocks fell.
Following a cruise missile strike on a Syrian air base last
week, the White House said on Monday it was ready to retaliate
if the Syrian government uses chemical weapons or deploys barrel
bombs in the country.
This comes as pressure is building on Russia to cut its ties
with Syrian President Bashar al-Assad, with some countries
proposing further sanctions on Moscow.
The Group of Seven major global powers were joined by Middle
East allies on Tuesday in a push to isolate Assad, hours before
the U.S. secretary of state flies to Moscow.
"Market moves generally fit with the theme of a moderate
risk-off tone amidst on-going geopolitical concerns," RBC's
global macro strategist Peter Schaffrik said.
Analysts said European markets were also reeling from the
latest twist in the race for the French presidency, as far-left
candidate Jean-Luc Melenchon climbs in opinion polls.
This has raised the possibility that Melenchon could square
off against far-right leader Marine Le Pen - both of whom are
eurosceptics - in the election's decisive second round in May.
Japanese investors dumped a record amount of French bonds in
February, data from Japan's Ministry of Finance showed on
German 10-year bond yields dropped around 3 basis points to
0.192 percent on Tuesday, the lowest since Feb 27.
French equivalents rose 2 basis points to a one-week high of
0.96 percent. The gap between the two benchmarks
held at its widest in six weeks at 75 basis points.
Yields on low-rated bonds of southern European countries
like Italy and Portugal also rose as investors ditched riskier
Later, the Netherlands will sell 0.75-1.25 billion euros of
bonds maturing in January 2033.
Austria is also selling a new 10-year bond via a group of
banks, with the deal expected to price later on Tuesday, IFR
For Reuters 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 Andrew Heavens)