UPDATE 2-Bund yields lowest in over a month on risk aversion, dollar gains

German Bund yields hit their lowest in over a month late on Wednesday as Turkey's currency crisis rumbled on and global trade worries grew, fuelling demand for safe-haven assets.

Global stocks were down and the dollar strengthened after focus returned to the impact of the lira rout on broader emerging markets. It has also raised concerns about the extent of European bank exposure to Turkey.

Germany's 10-year yield dipped to 0.29 percent, its lowest since mid-July, while long-dated debt rallied the most since late May hitting a yield low of 0.96 percent.

Explaining the move lower in Bund yields, Antoine Bouvet, rates strategist at Mizuho, said that while Wednesday was not the worst day for EM assets or Italy, the move higher in the dollar could not be ignored.

The dollar's index against six currencies rose above 96.9 for the first time since late June 2017.

"Most of Europe is out, which means we need less flow to move the market higher, but the dollar move is really not negligible," he said.

"It may not be the worst day for the Turkish lira but the fact that the dollar is strengthening keeps pushing things higher."

The selloff of recent days has reminded investors of the value of holding German government bonds in case of such episodes in the future, said Commerzbank strategist Christoph Rieger.

"What's become clear after this risk-off episode is the inherent safety value you have in Bunds. I think this will structurally underpin the safety value that we have already observed in Bunds before," he said.

Italian bond yields also rose in late trading as investors steered clear of peripheral Europe, though the moves higher were not due to Italy-specific concerns this time, according to Bouvet.

Italy's five-year yield rose to highs of 2.48 percent with the two-year 2 bps higher at 1.81 percent, while the long end was flat on the day.

Portuguese and Spanish government bond yields settled around 5 bps higher than the day's lows.

Earlier in the day, Germany sold a well-received 839 mln euros of bonds maturing in 2046, with bids totaling 1.335 bln euros. The solid reaction had been expected with the bid-to-cover ratio of 1.59 well above the 1.26 average.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)