* European shares climb after Asia sinks into the red
* Bond yields fall globally, Bunds at new low
* UK bond yields, pound under pressure
* Euro zone and UK PMI data weak
* https://tmsnrt.rs/2zpUAr4
By Marc Jones
LONDON, July 3 (Reuters) - Investors returned to bonds on
Wednesday, setting off another slide in benchmark debt yields,
amid fears of a global trade war and recession, bets central
banks will cut interest rates and falling oil prices.
European Union leaders' nomination of Christine Lagarde, the
head of the International Monetary Fund, to replace Mario Draghi
as president of the European Central Bank reinforced
expectations of more monetary policy easing if it's needed.
Traders greeted the decision by sinking German 10-year Bund
yields to record lows of minus 39 basis points, lowering Italian
two-year yields back into negative territory for first time in
over a year and lifting stocks and U.S. futures. .N GVD/EUR
The yield on 10-year UK gilts fell 4 basis points to 0.687%
GB10YT=RR , which left it below the Bank of England's main
policy rate for the first time in a decade. U.S. Treasury yields
slumped to their lowest since late 2016.
"We have already seen some weak data in recent weeks, so
that is the backdrop," said Elwin de Groot, head of macro
strategy at Rabobank. "And now have Christine Lagarde as the
likely successor of Mr Draghi at the ECB, which for the market
says that the dovish policies will continue."
European shares took little notice of some sizeable decline
in Asia's stock markets and pushed 0.8% higher. Gains were led
by an unusual pairing of defensive healthcare stocks and
carmakers, which both jumped 1.2%. .EU
There was plenty of data to digest, too. Euro area business
activity picked up last month, figures showed, but remained
weak. An upturn in services offset a downturn in factory output.
Worryingly, forward-looking indicators did not point to a
rebound, and other data showed Britain's economy apparently
shrank in the second quarter.
"The latest downturn has followed a gradual deterioration in
demand over the past year as Brexit-related uncertainty has
increasingly exacerbated the impact of a broader global economic
slowdown," Chris Williamson, chief business economist at IHS
Markit, said of the UK reading.
CROWN ON TOP
In the currency markets, the pound flirted with two-week
lows and stood at $1.2568 GBP=D4 , on course for its fifth drop
in the past six sessions.
The euro was steadier at $1.1282 EUR= . The dollar dropped
to 107.70 yen JPY= , off Monday's high of 108.535, which
followed a weekend agreement between the United States and China
to resume trade talks.
Sweden's crown reached a 2 1/2-month high of 10.4890 to the
euro after the Riksbank said it remained on track to raise rates
by early 2020, albeit with some caveats. /FRX
Oil prices also rose after data showed U.S. crude stockpiles
fell more than expected last week. They remained wobbly,
however, after falling more than 4% on Tuesday, even after OPEC
and allies including Russia agreed to extend supply cuts.
O/R
Brent crude LCOc1 futures rose 0.7% to $62.85 per barrel.
U.S. West Texas Intermediate crude CLc1 futures gained 0.6% to
$56.56 a barrel after dropping 4.8% the day before.
Gold XAU= gained 0.5% to $1,425.64 per ounce after rising
as high as $1,435.99. GOL/