UPDATE 2-Coronavirus treatment optimism ends Bund rally

* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Updates prices, adds ECB bond buying data)

By Yoruk Bahceli

AMSTERDAM, Aug 24 (Reuters) – Safe-haven German bond yields edged up on Monday after their longest declining streak since January as hopes for a coronavirus treatment boosted risk appetite.

Global shares rose on Monday after the U.S. Food and Drug Administration authorised the use of blood plasma from recovered patients as a coronavirus treatment option.

Safe-haven German 10-year yields were last up 1 basis point at -0.49%, ending six consecutive sessions of declines, the longest since January.

Italy’s 10-year bond yield was steady at around 1.00%, after touching a one-week high earlier at around 1.03%..

“The improvement in sentiment I find fairly fickle and hard to really extrapolate from,” said ING senior rates strategist Antoine Bouvet.

“I would be tempted to say the outlook for rates in the near term is lower, not higher, because we’re heading into month-end, which is giving a bit of a technical thrust to Bunds,” he said, expecting another rally at the end of the week.

Without major data releases to move the market on Monday, attention turned to a speech by Federal Reserve Chair Jerome Powell on Thursday, where he will discuss the bank’s monetary policy framework review.

Still, with 10-year Bund yields hovering around -0.50%, analysts don’t expect them to fall much below this level, which is the same as the European Central Bank’s deposit rate.

“The market is eyeing up what’s to come in September, and in EGBs (European government bonds) this will mean supply, but also the ECB becoming more active with their QE (quantitative easing) programs,” analysts at Mizuho told clients.

“This pick-up is more likely in the first week of September than the one coming, but the market will be pre-empting this buying.”

The ECB bought a net 19.179 billion euros ($16.21 billion) of assets last week as part of its quantitative easing programme, below the 19.926 billion euros it purchased a week earlier, it said.

Germany plans to issue at least 4 billion euros via its debut green bond in September, the country’ finance ministry announced.

It plans another green bond issue in the fourth quarter, meaning the total volume of Germany’s green bonds could reach 11 billion euros this year.

Belgium sold 1.5 billion euros of 10-year bonds via an auction on Monday. (Reporting by Yoruk Bahceli, additional reporting by Dhara Ranasinghe; editing by Larry King and David Evans)

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