* Negative-yielding euro zone govt bond pool at 48% in May
* Highest share since Sept 2016 - Tradeweb data
* Global pool of negative-yielding bonds over $10.5 trillion
* Dutch 10-year bond yield negative for 1st time since 2016 (Updates first paragraph, adds par on Japan)
By Dhara Ranasinghe
LONDON, May 31 (Reuters) - The Netherlands on Friday became the latest euro zone state to see its 10-year yields fall below zero percent, joining a pool of negative-yielding euro government bonds that grew in May to encompass 48% of the euro debt traded on Tradeweb.
This proportion, the latest sign of the pessimism gripping world markets, is the highest since September 2016, according to data from Tradeweb.
Bond yields across major developed markets have plunged this year as weak data, trade tensions and a dovish policy shift from major central banks boost demand for fixed income.
That trend has accelerated in May on signs of increasingly bitter trade tensions, heightened Brexit uncertainty and fears that Italy is set for another budget clash with Europe.
Of around the 7.69 trillion euros ($8.57 trillion) of euro area government bonds in the Tradeweb system, the proportion of debt yielding less than zero rose to 3.71 trillion euros or 48% of the total in May, data from the trading platform as of the close of trade on Thursday showed.
It is up from 3.44 trillion euros or roughly 45% in April. It is the largest share since September 2016, a year when deflation risks and global growth worries last drove bond yields in the bloc deeply negative.
"Bond markets are telling you that disinflation is coming," said Tim Graf, chief macro strategist at State Street Global Advisors in London.
"It speaks to a situation where markets are discounting more of a global slowdown than maybe we had previously thought," he said, referring to the deepening pool of negative-yielding government debt.
For an interactive version of the chart below, click: tmsnrt.rs/2V550om
Friday's sharp drop in euro zone debt yields following U.S. President Donald Trump's sudden threat to impose tariffs on Mexican goods -- suggests the pool of government bonds carrying sub-zero yields has only deepened.
Worldwide, analysts reckon more than $10.5 trillion in bonds now carry negative yields. That essentially means that in secondary bond markets, investors are willing to pay governments for holding their debt.
In Germany, the euro zone's biggest economy and its benchmark bond issuer, yields on 10-year government bonds fell to record lows at minus 0.21%.
It is now trading below Japan's 10-year bond yields, which stand at around minus 0.095%.
The yield on the triple-A rated Dutch 10-year bond yield, teetering close to 0% for days now, turned negative for the first time since 2016. It was last trading down 3 basis points at minus 0.014%.
Tradeweb data also showed almost 29% of euro zone government bonds -- some 2.2 trillion euros worth -- now yield less than the European Central Bank's deposit rate of minus 0.40 percent, the highest since December 2016. The proportion was 25% at the end of April.
"It is not a surprise that the pool of negative yielding bonds has risen," said Jan von Gerich, chief market strategist at Nordea. "There is no sign of a bottoming out in yields yet."
Reporting by Dhara Ranasinghe Editing by Sujata Rao and Raissa Kasolowsky