* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Olga Cotaga
LONDON, Jan 13 (Reuters) - Euro zone government bond yields were stable on Monday ahead of the signing of the Phase 1 trade deal between the United States and China, the first staging post in ending a dispute that threatened to hammer global growth and boosted demand for safer assets such as bonds.
Investors shifted their attention from the possibility of an imminent war in the Middle East after the United States imposed new sanctions on Iranian officials and businesses.
Traders re-focused on a warming of trade relations between the United States and China, the world’s two biggest economies, with the agreement due to be signed at the White House on Wednesday.
“Political cheering is likely surrounding the signing of the U.S.-China Phase 1 deal and data is unlikely to disrupt the picture for now,” said Antoine Bouvet, senior rates strategist at ING.
“That said, the situation in Iran remains fragile and the U.S. might well train its trade sights on other targets after progressing in China.”
The benchmark German Bund yield was trading neutral at -0.224%, with the rest of the euro area market trading similarly.
French yield were up 1 basis point at 0.060% following Saturday’s news that Prime Minister Edouard Philippe offered a major concession to unions contesting his government’s overhaul of the pension system, a move aimed at ending strikes which are now in their fifth week.
Italian yields were again the outliers, rising by 3.9 bps at 1.367%.
Rates will likely remain elevated as European countries prepare to issue government paper, said Bouvet. (Reporting by Olga Cotaga; editing by Nick Macfie)