* German Bund yield briefly touches one-month high
* Trump tax plan could revive reflation bets
* ECB rate outlook also keeps investors on edge
By Dhara Ranasinghe
LONDON, April 26 Most euro zone government bond
yields crept up on Wednesday, with U.S. President Donald Trump
set to release a tax reform plan that could help to revive
A report on Tuesday from Reuters that ECB policymakers see
scope for sending a small signal in June towards reducing
monetary stimulus also weighed on bond market sentiment, with
German Bund yields briefly touching one-month highs.
U.S. officials said Trump will release on Wednesday a plan
to cut business taxes sharply and discount the rate on corporate
profits brought back into the country.
Separately, the threat of a U.S. government shutdown this
weekend receded after Trump backed away from demanding Congress
include funding for his planned border wall with Mexico in a
"Trump is stealing the show today," said Martin van Vliet,
senior fixed-income strategist at ING. "The talk about his tax
plans are keeping markets busy, so we see euro zone bonds moving
U.S. and European bond yields rose along with stock markets
after Trump's election in November as investors bet that the new
president's economic policies would boost growth and inflation.
But so-called reflation trades have been scaled back in
recent months as investors await details of those policies.
Germany's benchmark 10-year Bund yield touched a one-month
high of 0.41 percent on Wednesday before pulling
back to about 0.35 percent, slightly lower on the day but still
up by about 15 basis points a week ago.
Other bond yields across the euro area were 1-5 bps higher
on the day.
On Tuesday, regional bond markets were hit by heavy selling
after a Reuters report citing three sources on and close to the
European Central Bank's Governing Council saying that, with the
threat of a run-off between two eurosceptic candidates in France
averted and with the economy on its best run in years, there may
be tweaks to the ECB's opening statement in June.
The ECB is scheduled to hold a policy meeting on Thursday,
with the focus on the potential for a scaling back of monetary
stimulus in the months ahead.
"Tomorrow's ECB meeting will probably be viewed from a
perspective of preparing the ground for tangible action in June,
probably in the form of an adjustment of the forward guidance,"
said Commerzbank rates strategist David Schnautz.
"More tomorrow looks unlikely as the ECB may not view the
French presidential election as much of a 'done deal' as the
Centrist Emmanuel Macron and far-right eurosceptic Marine Le
Pen face each other in the final round of voting in France's
presidential election on May 7.
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 Mark Trevelyan and David Goodman)