(Adds dropped word yield in paragraph 6)
* Euro zone bonds hold near recent lows
* Geopolitical concerns boost demand for safe-haven assets
* Markets waiting for minutes from ECB March minutes
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Fanny Potkin
LONDON, April 12 (Reuters) - Euro zone yields held near recent lows on Thursday as possible U.S. military action against Syria stoked investor concerns about geopolitical risk and boosted demand for safe-haven assets.
Following hawkish minutes from the U.S Federal Reserve, central bank guidance will remain in focus on Thursday, with debt markets closely watching for minutes from the European Central Bank’s March meeting.
Investors have been rattled by U.S. President Donald Trump’s threat of U.S. military action in Syria, which sent oil prices to their highest levels since late 2014 on concerns about supply.
Trump tweeted on Wednesday that missiles “will be coming”, taunting Russia for supporting Syrian President Bashar al-Assad after a suspected chemical attack on rebels.
His comments raised the prospect of direct conflict over Syria for the first time between the two world powers backing opposing sides in the seven-year-old civil war, which has also escalated a rivalry between Saudi Arabia and Iran.
Germany’s 10-year bund yield, the benchmark for the bloc and a traditional safe-haven asset, slipped to 0.493 percent in early trades.
Its U.S. counterpart was trading as low as 2.772 percent at the start of the European session.
U.S. Treasury yields briefly edged higher after modestly hawkish minutes from the Federal Reserve’s last policy meeting, as policymakers felt the U.S. economy would firm further and inflation would rise in the coming months.
Investors are now waiting for minutes from the European Central Bank’s March meeting, to be released at 1130 GMT.
“The ECB accounts from the overall rather unexciting March meeting will be scrutinised for hints whether or how the ECB may change its wording next time,” Commerzbank analysts wrote in a note.
ECB policymakers Benoit Coeure and Jens Weidmann are both due to speak later on Thursday. Coeure suggested previously that the role of rates guidance could be strengthened, but did not give specifics.
Ongoing concerns of a prolonged trade dispute between the United States and China are also keeping markets on edge.
China’s Commerce Ministry said on Thursday trade negotiations with the United States would be impossible as Washington’s attempts at dialogue were not sincere, and vowed to retaliate should Trump escalate current tensions.
Later in the day, Italy will hold of a sale of bonds maturing in 2021, 2025, 2038, and 2038 for over 7 billion euros.
Italian debt has outperformed its peers, with the premium investors demand to hold Italian 10-year bonds over top-rated German debt currently at 131 basis points, close to its tightest levels since 2016.
Italian President Sergio Mattarella is scheduled to hold further talks on Thursday and Friday to try stitch together a new government after an inconclusive March 4 election. (Reporting by Fanny Potkin Editing by Alison Williams)