* Germany's 10-yr yield dips to 3-month low of 0.33 pct
* Trump says expects to raise China tariffs - WSJ report
* Also says Brexit deal makes US-UK trade more difficult
* Italian inflation-linked auction to test sentiment
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Abhinav Ramnarayan
LONDON, Nov 27 (Reuters) - German government bond yields fell to their lowest in almost three months on Tuesday after U.S. President Trump brought global trade conflicts back into the limelight, fuelling concerns about the outlook for the global economy.
Trump said on Monday he expects to raise tariffs on Chinese imports and also said the agreement allowing the United Kingdom to leave the European Union may make trade between Washington and London more difficult, pushing sterling lower in early trade.
The two remarks were enough to bring the potential for trade wars back into the limelight, pushing high-grade euro zone bond yields lower over the impact these trade tensions may have on global growth.
"In recent weeks, market participants were focused on Brexit and Italy and trade wars were in the backdrop, and now President Trump has put it back on the agenda," said DZ Bank strategist Sebastian Fellechner.
"Especially this morning when we had news that General Motors is cutting jobs, and once again market participants are talking about the global economy slowing down," he added.
General Motors Co said on Monday it will cut production of slow-selling models and slash its North American workforce, the biggest restructuring for the U.S. No. 1 carmaker since its bankruptcy a decade ago.
The yield on German 10-year government bonds dropped 3 basis points to 0.33 percent, its lowest since early September.
Other high grade euro zone bond yields, such as those of the Netherlands and France, were also down 2-3 bps on the day and also close their lowest for a couple of months.
The drop in yields comes even though ECB President Mario Draghi said on Monday the loss of growth momentum in the euro zone was mostly normal and not enough to derail plans to dial back stimulus further.
Italian government bonds, meanwhile, held on to most of Monday's price gains, with yields higher just 1-3 basis points across the bond curve.
This came after Italian borrowing costs dropped sharply 10-15 bps on Monday on reports that Italy's governing coalition was bowing to pressure from the European Union and may reduce next year's budget deficit target.
An auction of Italian inflation-linked bonds on Tuesday should prove a pre-cursor to a bigger auction of conventional debt on Thursday.
These auctions will be a test of investor sentiment after last week's poor showing for the sale of BTP Italia bonds targeted at retail investors. (Reporting by Abhinav Ramnarayan)