Euro zone bonds continue to benefit from market jitters, yields fall

LONDON, April 16 (Reuters) - Euro zone government bond yields dipped on Thursday, with German Bunds outperforming both other European peers and particularly U.S. Treasuries as a new burst of risk aversion across assets pushed investors back towards the safe haven.

Germany's 10-year bond yield was down 5 basis points at 2.50%, its lowest in slightly over a week.

The euro zone benchmark has been a major beneficiary from the recent tariff-induced market turmoil, particularly due to some jitters about U.S. Treasuries.

It is trading broadly at the same level it was in early March before the announcement of a historic shift in German borrowing and fiscal policy sent the German 10-year yields above 2.9%.

The U.S 10 year Treasury was little changed on the day at 4.32% leaving the gap between it and Germany's 10-year yield wider at 182 bps. That gap was as narrow as 140 bps in early April.

Sentiment across markets Thursday took a hit as an announcement of new U.S. curbs on chip sales to China highlighted potential impending damage in a tit-for-tat global trade war.

The European Central Bank meets Thursday but as markets see a rate cut as all-but-certain, the focus will be on what policymakers say about tariffs and whether they give any hits about how much further to cut rates.

Elsewhere in European rates, Italy's 10-year yield was down 4 bps at 3.69% and Germany's rate-sensitive two-year yield was also 4 bps lower at 1.73%.

(Reporting by Alun John Editing by Bernadette Baum)