(Corrects 10-year German yield in eighth paragraph)
* Euro zone, U.S. PMIs beat expectations
* Improving data eases pressure on ECB for rate cut
* Bunds fall, impact on peripheries limited
By Marius Zaharia
LONDON, July 24 (Reuters) - German bond yields jumped on Wednesday, with upbeat business surveys in the euro zone and the United States suggesting future global monetary conditions could be tighter than investors previously expected.
Markit's flash Eurozone Composite PMI jumped to an 18-month high of 50.4 in July from 48.7 in June, beating even the most optimistic forecast in a Reuters poll.
It was the first month the PMI has been above the 50 mark that divides growth and contraction since January 2012 and analysts said it eased pressure on the European Central Bank to further loosen monetary policy.
Above-forecast U.S. manufacturing PMIs also reinforced the case for the Federal Reserve to reduce the pace of asset purchases later this year.
Bund futures fell more than a point to 141.72 in a session that posted the highest volumes in a month at just over 800,000 lots, suggesting strong investor conviction behind the selloff and ruling out seasonal factors exacerbating the move.
"This move is significant," said Marius Daheim, chief strategist at Bayerische Landesbank. "I would imagine there are a couple of people out there changing their views about further ECB easing after the data."
On July 4, the ECB left the door open for further monetary easing, declaring it would keep interest rates at record lows for an extended period and might yet cut further. Fed Chairman Ben Bernanke has also said earlier this month that the plan to scale back stimulus was not set in stone and was data dependent.
German 10-year government bond yields rose 10 basis points to 1.64 percent, with the benchmark paper underperforming its euro zone peers.
Yields on lower-rated Spanish and Italian 10-year debt were flat at 4.65 percent and 4.37 percent, respectively.
Equivalent Portuguese yields dipped 4 bps to 6.47 percent, with the bonds extending a rally after the government averted a collapse that would have threatened Lisbon's planned exit from its bailout next year.
The president approved on Tuesday the promotion of junior coalition party leader Paulo Portas to deputy prime minister and a wider government reshuffle as proposed by premier Pedro Passos Coelho to ensure the ruling coalition's unity after a rift.
The yield gap between five- and 10-year Portuguese bonds has widened in recent days but, at 45 bps, was not far from its narrowest level in over a year of 22 bps, hit earlier this month. A slim gap, and therefore a flat yield curve, indicated lingering worries about the country's credit quality.
UniCredit strategists recommended investors to bet on a steeper curve by buying October 2014 bonds against October 2023 or February 2024 bonds.
Market participants said news that Royal Bank of Canada shut down its European government bond trading business had little impact. (Additional reporting by Ana Nicolaci da Costa; Editing by Catherine Evans/Ruth Pitchford)