* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Yoruk Bahceli
LONDON, Feb 7 (Reuters) - Euro zone bond yields fell as risk appetite dwindled on Friday, with further cases of coronavirus boosting safe-haven assets.
The death toll in mainland China reached 636 with 73 more deaths recorded by Thursday and 3,143 new confirmed cases, taking the total to 31,161 cases, China’s National Health Commission said.
“The reason that fixed-income is looking firmer ... is the reaction formation from stock markets overnight with losses there in the face of signs that the spread of the virus is not so far showing signs of slowing,” said DZ Bank strategist Andy Cossor.
The pan-European stocks benchmark STOXX 600 was down 0.2% after four straight days of gains.
“If you get bad coronavirus death numbers out of China over the weekend, which would be bad for risky assets, you can’t get in and out of the market when it’s closed,” Cossor said of investor demand for bonds on Friday.
Most 10-year government bond yields fell in early trade. Germany’s 10-year yield was down 2 basis point to -0.39% .
The Bund is set to have its worst week in a month, with yields up 6 basis points this week and after reaching three-and-a-half-month lows of -0.447% at the start of the week, as Chinese authorities stepped up measures to relieve pressure on the economy.
China’s economic activity is expected to recover once the virus is brought under control, a deputy governor of the country’s central bank said on Friday.
In Europe, Germany’s industrial output registered its biggest drop in more than a decade in December, revised data showed. That followed an unexpected decline in industrial orders for December.
Later in the session, investors will focus on U.S. non-farm payrolls due at 1330 GMT. A Reuters poll forecast a pick-up in January, but focus is on a revision of data from April 2018 to March 2019. Any steep downgrade for that period would suggest a significant slowdown in job growth this year. (Reporting by Yoruk Bahceli, editing by Larry King)