* Global stocks subdued, U.S. futures point lower
* China factory-gate prices fall sharply in Aug
* Markets on edge before ECB meeting
* Germany kicks off 2020 budget debate amid stimulus hopes
* German 30-yr yields: https://tmsnrt.rs/2A8XP5y
By Karin Strohecker
LONDON, Sept 10 (Reuters) - Global bond yields rose on
Monday, amid growing caution over the extent to which the
European Central Bank will add stimulus to boost an ailing
economy this week and rising hopes that Berlin could loosen its
purse strings.
Germany's 30-year benchmark bond yield DE30YT=RR briefly
broke into positive territory for the first time in more than a
month, while U.S. Treasury yields US2YT=RR US10YT=RR
US30YT=RR climbed to 18-day highs.
Safe-haven assets have been caught up in the fixed income
sell-off, with gold XAU= touching a one-month trough and
Japan's yen plumbing a five-week low. But equities
.MIWD00000PUS failed to make gains, as weak Chinese producer
prices data dampened the mood.
The bond moves comes as markets are gearing up for
Thursday's European Central Bank (ECB) meeting, which is widely
expected to deliver a cut to interest rates and point to further
bond-buying stimulus. However, there is a growing chorus of opinion that ECB
policymakers and other central banks with negative interest
rates and sub-zero long-term sovereign bond yields are nearing
the limits of stimulus policies.
Germany also starts to debate its 2020 budget in parliament
later in the day, where Finance Minister Olaf Scholz's speech
will be scrutinised after Reuters reported Berlin was looking
into creating a "shadow budget" to boost public investment and
effectively circumvent limits set by its national debt rules.
"These stories have become more frequent in recent weeks,"
said Deutsche Bank's Jim Reid. "Whilst the market always gets
more excited by the headlines than is justified by hard evidence
of any change in policy, it's fair to conclude that market
pressure and chatter on this story is building."
Europe's largest economy is teetering on the brink of
recession, but strict national spending rules have tied
policymakers hands on fiscal policy.
The U.S. Federal Reserve is also widely expected to cut
interest rates next week as policymakers race to shield the
global economy from risks, which also include Britain's planned
exit from the European Union.
With interest rates plumbing record lows in many countries
and the effectiveness of further bond-buying muted by already
record-low borrowing costs for governments, attention has turned
to increased public spending or tax cuts to fire up growth.
A CHINESE CLOUD
The sell-off in fixed income markets failed to lift global
stocks, where the mood was subdued amid concerns over the health
of the world economy.
Data showing China's mainland factory-gate prices shrank at
their fastest pace in three years, as flagging demand at home
and abroad forced some businesses to slash prices, saw Asian
bourses slip lower. In Europe, the pan-European stocks benchmark index STOXX 600
.STOXX fell 0.4% in a second day of losses.
China-sensitive German stocks .GDAXI eased 0.3% while
France's CAC .FCHI dropped 0.6%.
"China inflation data was probably the worst combination of
prints the market could have hoped for," said Stephen Innes,
Market Strategist AXI Trader.
"While the enormous slide in China factory gate prices
reminded us of what we already know, U.S. tariffs are sinking
the Chinese economy and at a much quicker pace than anyone could
have imagined."
However, climbing bond yields helped lift European banking
stocks .SX7P 0.3% - one of the few sectors in the black.
U.S. stock futures ESc1 YMc1 NQc1 pointed to a lower
open on Wall Street after the S&P 500 .SPX ended flat in New
York on Monday. .N
In currencies, the rise in Treasury yields helped lift the
dollar to touch a five-week high of 107.50 yen JPY=EBS . The
euro EUR=EBS was flat at $1.104 after reaching an overnight
high of $1.1067.
The pound GBP=D3 traded near a six-week high of $1.2385
after a law came into force demanding that Prime Minister Boris
Johnson delay Britain's departure from the European Union unless
he can strike a divorce deal with the bloc. Oil futures hit their highest level in six weeks in Asia
after Saudi Arabia's new energy minister confirmed he would
stick with his country's policy of limiting crude output to
support prices. O/R
U.S. crude CLc1 traded at $57.97 a barrel after hitting
the highest since July 31. Brent crude futures LCOc1 climbed
to $62.67 a barrel.
Prince Abdulaziz bin Salman, who became Saudi Arabia's new
energy minister on Sunday, told reporters there would be "no
radical" change in Saudi's oil policy. Saudi Arabia is OPEC's de
facto leader.
German 30-yr yield https://tmsnrt.rs/2A8XP5y
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