* German Q1 GDP up 0.8 pct q/q, beats forecasts
* ECB easing expectations trump other factors
* Monetary policy guidance limiting market reaction to data
By Marius Zaharia
LONDON, May 15 (Reuters) - Stronger-than-expected German first quarter economic growth data pushed yields on top-rated euro zone bonds slightly higher on Thursday, but the move was limited given the European Central Bank has flagged policy easing for June.
German economic growth doubled in the first three months of the year to 0.8 percent, beating expectations and offsetting from a regional perspective France’s below-forecast zero percent growth. Regional figures are due at 0900 GMT.
The German numbers pushed German, Dutch, Austrian, Finnish and French bonds 1 basis point higher, while yields on lower-rated bonds from Spain, Ireland and Italy dipped slightly.
German 10-year Bund yields, the benchmark for euro zone borrowing costs, last traded at 1.38 percent, a touch above one-year lows hit the previous day.
“There’s a good chance we will see a small positive surprise in euro zone (growth) numbers,” said Jan von Gerich, chief fixed income analyst at Nordea. “But I don’t think we will see a big back-up in yields with ECB easing in the pipeline.”
It was the second time this week bond markets showed little reaction to major regional economic data. A reading of Germany’s ZEW economic sentiment survey came roughly eight points below forecasts at its lowest in nearly 1-1/2 years on Tuesday, with little impact on bonds.
A clear signal by ECB President Mario Draghi last week that the bank was poised to ease monetary policy next month to support the economy and lift inflation has limited the speculation on what impact data might have on policy moves.
The bank’s package of policy options for the June meeting includes cuts in all its interest rates and targeted measures aimed at boosting lending to small and mid-sized firms, sources familiar with the measures told Reuters.
Ultra-easy monetary policy across the globe has boosted both top- and lower-rated bonds, as well as equities, over the past few years, even though global growth remained sluggish.
The lack of market reaction to economic data shows the extent to which central bank policies have trumped other traditional market drivers.
“Growth numbers at the moment don’t have much impact. The market is very much focused on what the ECB will do,” said Felix Herrmann, a market strategist at DZ Bank, predicting euro zone manufacturing and services surveys next week were likely to have a limited impact as well.
“Whether it’s healthy or not is a good question. Sooner or later the market will have to react to economic fundamentals.” (Reporting by Marius Zaharia; Editing by John Stonestreet)