* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Adds details, clarification on move in Swiss yields)
By Olga Cotaga and Yoruk Bahceli
LONDON, Oct 23 (Reuters) - Euro zone government bond yields fell on Wednesday as investors grew more wary about how and when Britain will leave the European Union.
British lawmakers signalled their support for the Brexit deal British Prime Minister Boris Johnson agreed with the European Union last week but defeated him on his timetable to rush the legislation through the House of Commons in just three days, making ratification of his deal by the Oct. 31 deadline almost impossible.
Talk of an early general election to break the impasse and of a possible Brexit extension dominated Wednesday.
European Council President Donald Tusk said on Tuesday that he would recommend the 27 other EU member states approve a delay until next year. But a French diplomatic source said France was ready to grant only a few days.
German 10-year Bund yields fell 3 basis points to -0.40% .
“There is a lot of noise and uncertainty for the time being,” said Rainer Guntermann, rates strategist at Commerzbank.
Meanwhile, a flash estimate showed euro zone consumer morale decreased to -7.6 this month from -6.5 in September, worse than a -6.7 expectation in a Reuters poll of economists.
Swiss government bond yields also fell, with the 10-year yield around -0.61%.
Refinitiv data showed the Swiss 10-year bond yield dropped by 10 bps on Wednesday. But analysts said other platforms only showed the bond yield around 2 bps lower, in line with the broader move lower in European yields.
UBS strategist Lefteris Farmakis said such discrepancies can occur because generic benchmarks such as those used by Refinitiv can show larger moves in yields than those of individual bonds.
Italian government bonds underperformed after a rally on Tuesday that marked their best day in October, with the 10-year yield up 2 basis points at 1.05%.
Italy can lower its 2.3 trillion euro public debt only gradually, the economy minister said, after the EU Commission asked for details on Rome’s debt reduction path.
The budget situation is a “very different situation from where we were last year and last year they managed to get a deal, so this year it’s going to be a lot easier,” said UBS strategist Lefteris Farmakis.
“The other thing to keep in mind is the outgoing commission is out in eight days time, so it’s up to the new commission to send new signals on how they want to negotiate.”
Italy raised 6.75 billion euros ($7.5 billion) with its latest inflation-linked bond. That too may have pushed yields higher as investors made room for new supply.
Elsewhere, the European Central Bank is due to meet on Thursday, but most analysts agree that the meeting should be a non-event, given that the central bank’s planned monetary policy stimulus is due to start on Nov. 1. It will, however, be Mario Draghi’s last meeting at the helm of the ECB. (Reporting by Olga Cotaga Editing by William Maclean and Kirsten Donovan)