* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
LONDON, July 6 (Reuters) - Germany’s benchmark 10-year Bund yield edged up on Monday, pulling further away from recent five-week lows in the face of rallying equity markets.
Safe-haven German bonds yields rose almost 5 basis points last week in the biggest weekly selloff in a month as investors focused attention on the prospects for a swift recovery from the coronavirus pandemic.
European stock markets opened higher on Monday and Asian shares scaled four-month peaks as investors counted on a revival in Chinese activity to boost global economic growth, even as surging coronavirus cases delayed business re-openings across the United States.
Data showed orders for German industrial goods rose by 10.4% in May, rebounding from their biggest drop since records began in 1991 the previous month.
Against this backdrop, borrowing costs in most higher-rated euro zone countries were 1-2 basis points higher on the day.
Germany’s benchmark 10-year Bund yield was up around a basis point at -0.42%, holding above five-week lows hit last week at around -0.49%.
In a report released last week, Deutsche Bank forecast Bund yields rising to -0.2% by year-end.
But in the near-term, there was little to drive bond markets, said analysts, noting a slowing in new supply this week as well.
“Expectation management and political haggling ahead of next week’s ECB (European Central Bank) meeting and EU summit are unlikely to push Bunds out of their recent ranges,” said Rainer Guntermann, rates strategist at Commerzbank.
“European government bond spreads have scope to tighten as the flow profile improves and light calendars provide a fertile backdrop for opportunistic issuance.”
Italy’s 10-year bond yield was steady in early trade at around 1.32%, with the gap over German Bund yields hovering around 174 bps. (Reporting by Dhara Ranasinghe, editing by Ed Osmond)