* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Virginia Furness
LONDON, Jan 14 (Reuters) - Euro zone bond yields slid on Monday after weak Chinese data and the threat of a new election in Greece increased risk aversion, while investors awaited further clarity from Tuesday’s Brexit vote in Britain’s parliament.
Asian and European shares dropped on Monday after China’s exports unexpectedly fell the most in two years in December, but despite a marked cooling in one of the world’s largest economies, the bid for safe haven euro zone bonds was muted.
Germany’s 10-year government bond yield, the benchmark for the region was quoted at around 0.23 percent in early trade , fell around 1.5 basis points to 0.222 percent, lower on Friday’s close but bolstered by new supply last week.
Rene Albrecht, a rates analyst at DZ Bank, said that despite the news flow, Bund trading was in “stalemate” ahead of the British parliamentary vote on Brexit on Tuesday.
“It doesn’t know if it should rally or retreat,” he said. “Everyone is waiting for the vote, and afterwards will have some higher degree of certainty, which could trigger a yield rise in safe havens if uncertainty is lower.”
The future path of Britain’s exit from the European Union is uncertain as parliament is likely to vote down Prime Minister Theresa May’s deal on Tuesday. Possible outcomes include a last-minute deal, a disorderly exit, a new referendum or remaining in the bloc.
Non-core euro zone bond yields rose in early trade. The Threat of new elections in Greece kept upward pressure on its bond yields with its 10-year government bond yield opening at 4.28 percent.
Greek Prime Minister Alexis Tsipras on Sunday said he would call a confidence vote in his government after his coalition ally quit, leaving him bereft of a parliamentary majority and raising the possibility of a snap election.
Greece is expected to bring a new syndication to market soon but further political uncertainty and any rise in yields may skewer its chances of a new deal in the short term.
Italian government bond yields rose around 3 basis points in early trade. Italy’s Treasury minister on Sunday said he did not see a recession on the horizon, but acknowledged that Italy’s economy could be in a period of stagnation. DBRS on Friday affirmed Italy’s rating at BBB, removing the first possible ratings hurdle of the year.
Reporting by Virginia Furness; Editing by Alison Williams