* Bunds fall as delayed Syria strike lifts equities
* German 10-year yields near 1-1/2 highs
* Strong UK PMI data adds to selling pressure on Bunds
By Ana Nicolaci da Costa and Emelia Sithole-Matarise
LONDON, Sept 2 (Reuters) - German bond yields rose on Monday as riskier assets drew comfort from U.S. President Barack Obama’s decision to put off any military action against Syria until after consulting Congress.
Obama’s announcement on Saturday that he would seek congressional authorisation is likely to delay for at least nine days any attacks, the threat of which had driven investors to seek safety in top-rated government debt like Bunds.
Data showing China and much of Europe’s manufacturing sectors grew in August also benefited riskier equity markets to the detriment of safe-haven bonds.
“Any risk of strikes from some Western countries on Syria has decreased at least near-term,” Patrick Jacq, European rate strategist at BNP Paribas said.
“The risk premium linked to geopolitical events has decreased, so risk appetite probably is resuming somewhat.”
Ten-year German bond yields rose 6 basis points to 1.91 percent, not far from 1-1/2 year highs of 1.98 percent hit in August.
German Bund futures fell 66 ticks to 140.00 in what traders expected to be a quiet session due to the U.S. Labor Day holiday. They posted their biggest weekly gain since mid-July last week.
Analysts also said investors could be positioning for the European Central Bank’s monetary policy meeting this week, where President Mario Draghi will have to balance the recent improvement in economic data with a rise in market yields, which some worry could blunt the recovery.
U.S. economic reports, particularly the labour market figures on Friday, could confirm expectations that the Federal Reserve will start cutting its monetary stimulus this month.
Some in the market, however, saw a risk that the ECB would adopt a more dovish tone to try and curb rising money market rates while the U.S. non-farm payrolls data could undershoot expectations.
“Many people expected we would be testing the 2 percent barrier (on 10-year Bund yields) but I don’t think this is going to happen this week,” said Norbert Wuthe, a strategist at Bayerische Landesbank.
“The ECB could put more credibility to its forward guidance ... and the economic data this week could come in a bit weaker,” he said, adding although an imminent U.S.-led strike on Syria had receded, it was still a possibility.
The improved risk sentiment helped subdue yields on lower-rated euro zone bonds. Ten-year Spanish government bond yields were 7.5 bps lower at 4.46 percent and equivalent Italian yields were 2 bps down at 4.37 percent.
Ten-year Portuguese yields were 7 bps lower at 6.76 percent, having risen sharply on Friday after the country’s constitutional court rejected a labour bill and dealt a blow to the austerity programme set out under Lisbon’s bailout.