* German Bund yield off 2-1/2 week lows
* World risk appetite pick up
* Draghi, Powell, Kuroda to speak at Sintra forum
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Updates throughout)
By Dhara Ranasinghe
LONDON, June 20 (Reuters) - German bond yields pulled back from 2-1/2 week lows on Wednesday as world stock markets put aside trade war fears and rallied, taking the shine off safe-haven bond markets.
An escalation in trade tensions between the United States and China, plus dovish rhetoric from the European Central Bank that has boosted confidence a rate hike remains some way off, have pushed down bond yields in recent days.
But having hit more than two-week lows, yields on 10-year bonds in the single currency bloc were unlikely to fall much further without a fresh impetus, analysts said.
That could come later in the day, given that a number of central bankers are due to speak at an ECB forum.
Federal Reserve Chair Jerome Powell, ECB chief Mario Draghi, Bank of Japan Governor Haruhiko Kuroda and Reserve Bank of Australia Governor Philip Lowe all speak in Sintra, Portugal.
“We have a heavyweight policy panel ... four different banks with four different backgrounds and we’ve already heard from Draghi who has reiterated the need for patience and prudence,” said Commerzbank rates strategist Rainer Guntermann.
“I suspect safe-havens such as Bunds and Treasuries could be put to the test as risk sentiment shows signs of stabilising.”
Most 10-year bond yields were little changed on the day. Germany’s Bund yield was steady at 0.37 percent, but above a 2-1/2 week low of 0.35 percent hit on Tuesday.
Monetary policy will remain loose even though it is on track to end bond purchases at the end of the year and possibly raise rates next summer, ECB policymaker Francois Villeroy de Galhau said on Wednesday.
Market rate hike expectations have been pushed back by three months to September 2019 since the ECB’s guidance on the outlook for rates at last week’s central bank meeting.
Money market pricing suggests just one 10-basis-point rate hike is fully priced in by investors next year. <ECB WATCH>
There was some outperformance of peripheral bonds after Germany and France on Tuesday agreed to create a budget for the euro zone and hailed a “new chapter” for the currency union.
Italy’s 10-year bond yield briefly dipped to a 2-1/2 week low at 2.536 percent, before rising back up.
“Yesterday’s joint statement by France and Germany could help to improve sentiment in the euro zone at the margin,” UniCredit said in a note.
“Combined with last week’s dovish ECB tones, this should provide ongoing support to the periphery. The relative lack of details, however, suggest a cautious approach anyway.”
Elsewhere, Germany sold just over 1 billion euros of 30-year government bonds.
Reporting by Dhara Ranasinghe Editing by Catherine Evans and Alexander Smith
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