September 6, 2017 / 7:46 AM / a year ago

Germany's 10-year bond slips to one-week lows day before ECB meets

* Bund yields falls to 0.325 pct

* Sharp overnight fall in U.S. yields support bond markets

* Germany to auction 5-year bonds

* Euro zone periphery govt bond yields

By Dhara Ranasinghe

LONDON, Sept 6 (Reuters) - Germany’s 10-year bond yield fell to its lowest level in just over a week on Wednesday, as the nuclear stand-off with North Korea, weak German data and concern about the impact of powerful storm Irma on the U.S. economy underpinned safe-haven debt.

Just a day before the European Central Bank meets, Bund yields were within sight of the lowest levels since a speech by central bank chief Mario Draghi on June 27 sparked a sharp bond sell-off by boosting expectations for a tapering of stimulus.

While those assumptions have since been scaled back, Thursday’s ECB meeting remains a key risk event for markets.

Data on Wednesday showed German industrial orders fell unexpectedly in July, suggesting that this sector of Europe’s largest economy could shift into a lower gear in coming months.

Germany’s 10-year bond yield fall 1 basis point to 0.325 percent - its lowest level in just over a week. It was within striking distance of two-month lows hit last week and its lowest levels since Draghi’s Sintra speech.

Two-year German bonds yields touched minus 0.79 percent , their lowest levels since April.

Other euro zone bond yields were flat to a basis point lower in early trade.

North Korea tensions, exacerbated by a nuclear missile test at the weekend, continued to temper demand for risk assets globally, benefiting safe-havens such as German and U.S. bonds.

U.S. Treasury yields fell to their lowest levels in almost 10-months on Tuesday, while Japanese government bonds were mostly firm on Wednesday.

“The 10 basis point fall in Treasury yields is clearly not something the European market can ignore,” said Mizuho rates strategist Antoine Bouvet.

“The market’s also taking a bit of view on what the U.S. Federal Reserve will do next.”

Federal Reserve Governor Lael Brainard said on Tuesday the U.S. central bank should be cautious about raising interest rates further as inflation has been stuck below the Fed’s 2 percent goal.

Concerns about the impact of storm Irma was another focus for markets.

Irma, a Category 5 storm - the highest hurricane ranking used by U.S. forecasters - is expected to arrive on the U.S. mainland at the weekend with possibly greater force than storm Harvey unleashed on Texas.

Germany is scheduled to sell 3 billion euros of five-year bonds later in the day.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=

Reporting by Dhara Ranasinghe; Editing by Toby Chopra

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