UPDATE 2-Investors stick with safe-haven bonds on trade, Brexit concerns

Eurozone safe-haven bond yields dipped on Wednesday as trade tensions between China and the United States and renewed political uncertainty around Britain's exit from the European Union kept investors on edge.

Washington's temporary relaxation of curbs against China's Huawei Technologies has failed to offset deeper worries about an intensifying trade war between the world's two largest economies. Adding to the nervousness, British Prime Minister Theresa May's last-ditch attempt to deliver a Brexit deal was widely panned by lawmakers, setting Britain on course for another period of uncertainty and worrying investors who do not know when or whether the United Kingdom will leave the EU.

"The tone of re-nervousness has come from two sources. The re-escalation of the trade war ... and the tensions around the Brexit vote," said Matthew Cairns, a fixed-income strategist at Rabobank. Brexit uncertainty prompted investors to buy British government bonds and pushed the 10-year Germany/Britain bond yield gap to its narrowest in six-weeks.

UK ten-year government bond yields were on track for their largest one day fall since March 21 and were down more than six basis points on the day to 1.02%. The 10-year German Bund yield, the go-to safe-haven bond when investors are jittery, was also lower having dropped almost three basis points to -0.084 percent.

Portugal hopes to raise 2 billion yuan from a Chinese yuan-denominated Panda bond - the first to be launched by a eurozone country. The country's finance minister said late on Wednesday Portugal expected to price the bond on May. 30. Elsewhere, Italian yields fell, helped by opinion polls that suggest Deputy Prime Minister Matteo Salvini's far-right party may not do as well as the European parliamentary elections as previously thought.

Some investors are concerned a strong showing for Salvini - as well as other populist parties across Europe - will lead to another showdown between Rome and Brussels over Italy's budget plans. But Eric Brard head of fixed income at Amundi said that while there is a risk linked to the result of the election, the most likely scenario is the "uneventful one."

"We anticipate already that the results will show some progression in populism so markets are ready for this type of outcome," he said. "I am not nervous." The latest data on Italian growth will do little to soothe investor concerns either with national statistics bureau INSTAT slashing growth to 0.3% from the 1.3% projection it made in November.

Italy is "fiercely" committed to exceeding a government GDP growth forecast of 0.2% in 2019, Prime Minister Giuseppe Conte said on Wednesday. Italian short-dated bond yields were around two basis points lower to 0.59% for the 2-year and 1.75% for the 5-year. Its 10-year yield was 2.64 %.