Euro zone yields dip as strong US Treasury auction supports global bonds

LONDON, July 10 (Reuters) - Euro zone bond yields inched lower in early trading on Thursday, as a strong U.S. Treasury auction in the previous session offered support to global government bonds.

Germany's 10-year yield, the benchmark for the currency bloc, was down 1 basis point at 2.62%. It hit a six-week top of 2.668% earlier in the week, but has since been gradually moving lower.

Euro zone investors remain on the sidelines as they await the outcome of U.S.-EU trade talks, leaving markets in a holding pattern until a deal is reached.

EU trade chief Maros Sefcovic said on Wednesday that good progress had been made on a framework trade agreement and a deal may even be possible within days.

In the meantime, the U.S. bond auction, which took place after the European markets closed on Wednesday, remained the main driver, albeit in quiet trading.

The Treasury saw strong demand for a $39 billion sale of 10-year notes, indicating that concerns over investors stepping away from the market appear so far to be unfounded, and sending U.S. yields lower.

Italy's 10-year yield, the benchmark for the European periphery, was broadly trading in line with Germany's, last down 1 basis point at 3.54%. (Reporting by Alun John; Editing by Sherry Jacob-Phillips)