* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Olga Cotaga
LONDON, Dec 4 (Reuters) - Euro zone government bond yields fell more on Wednesday as concern grows that the trade war between the United States and China is here to stay, after President Donald Trump said he was in no rush to sign a deal.
Traders are getting jittery as there are less than two weeks remaining until Dec. 15, when new tariffs on Chinese imports to the United States are set to take effect unless cancelled.
Trump said on Tuesday a trade deal with China might have to wait until after the U.S. presidential election in November 2020, denting hopes that the two largest economies would soon reach an initial deal to ease their damaging trade war.
U.S. Commerce Secretary Wilbur Ross on Tuesday said it was more important to get a proper trade agreement with China than to get the deal done by this December or next December - after the 2020 presidential election.
The U.S. House of Representatives passing a bill that would require the Trump administration to toughen its response to China’s crackdown on its Muslim minority in Xinjiang has added fuel to the fire. China has threatened to retaliate, which could upset the trade negotiations going on between the two.
On top of that, Ross said on Tuesday the Trump administration has not ruled out imposing tariffs on imported autos.
A U.S. threat to impose duties of up to 100% on imports of champagne, handbags and other French products also remains in place, sparking comments of possible retaliation from France and other European Union members during a NATO summit in London.
“In this type of environment, we are inclined to think that core government bonds would outperform as investors seek their safety,” said ING analysts in a note to clients, adding that “risk assets on the other hand seem more at risk.”
Concerns that a trade deal could be pushed out to next year could act as a further headwind for risky assets such as equities, and for the global economy, which is already struggling to gain traction while major central banks are reaching their limits in policy stimulus.
Benchmark German 10-year government debt yields were down 1.7 basis points at -0.362%, with the rest of the euro area market falling by 1 to 2 bps as bond prices rose.
Traders will be watching the composite final purchasing managers’ index, due at 0900 GMT, which is expected to stay at 50.3 in November. (Reporting by Olga Cotaga; Editing by Hugh Lawson)