January 30, 2020 / 8:03 AM / a month ago

China virus fears fuels bond yield drop; yuan tumbles

LONDON, Jan 30 (Reuters) - The rising death toll from a virus spreading in China sent investors scurrying to the shelter of perceived safe-haven assets including government debt and the Japanese yen on Thursday, while China's yuan tumbled.

Safe-haven U.S. and German government bond yields fell sharply, reflecting concern about the rapid spread of cronavirus and its impact on the global economy.

As U.S. 10-year Treasury yields fell to 1.55%, their lowest levels since early October, the yield curve - as measured by the gap between 10-year and three-month note yields inverted again.

In the euro zone, Germany's benchmark 10-year Bund yield fell to -0.41% -- a three-month low.

Risk aversion was also evident in currency markets with the Japanese yen and the Swiss franc gaining in early London trading.

The Chinese yuan in the offshore market, considered as a barometer of risk sentiment towards Chinese assets as mainland and Hong Kong markets are shut, tumbled to a one-month low below the psychological 7 yuan per dollar level.

The number of confirmed deaths from the virus in China has climbed to 170 with 7,711 people infected, and more cases are being reported around the world. (Reporting by Dhara Ranasinghe and Saikat Chatterjee)

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