Bunds trapped in second-longest losing streak in 10 years

Updates throughout with afternoon European price action

By Greta Rosen Fondahn and Amanda Cooper

Jan 14 (Reuters) - German 10-year government bond yields rose for a tenth day on Tuesday, their second-longest stretch of increases in a decade, as concern about a global rise in inflation hit prices, even before U.S. President-elect Donald Trump takes office.

Yields have risen globally in recent weeks as investors have pared back their expectations for U.S. rate cuts, particularly in light of the potential increase in price pressures from Trump's proposed policies on trade and the economy.

Earlier in the day, sentiment improved modestly after a media report suggested Trump could take a measured approach to tariffs once he takes office on Jan. 20, although bond yields did not stray far from their recent peaks.

Data in the European afternoon that showed U.S. wholesale inflation rose less than expected in December gave bond prices a short-lived boost.

By the close of trade, the yield on the benchmark 10-year Bund DE10YT=RR was up 3 basis points (bps) at 2.62%, having hit its highest since July earlier in the day.

Bund yields rose for a tenth consecutive session, their longest since an 11-day streak in early 2022, which in turn was the longest since at least 2015, according to LSEG data.

Danske Bank chief analyst Piet Haines Christiansen said uncertainties over the incoming Trump administration's policies, and the prospect of the "inflation scare" coming back, were driving the bond market.

"The nervousness about what he (Trump) will do... It really keeps the market on its toes, especially the bond market," and this nervousness would likely remain for a while, said Haines Christiansen.

U.S. 10-year Treasury yields US10YR=RR were last down 1.3 bps at 4.792%, near Monday's 14-month highs.

French 10-year yields FR10YT=RR rose 1.8 bps to 3.473%, leaving their premium over Bunds steady at 85 bps DE10FR10=RR

French Prime Minister Francois Bayrou on Tuesday opened the door to renegotiating a 2023 pension reform in an attempt to win the support of left-wing lawmakers to pass the 2025 budget, which contains billions in tax rises and spending cuts.

Bayrou, who was addressing lawmakers, warned France's debt pile was a "sword of Damocles" that is hanging over the heads of future generations.

The premium investors demand to hold French debt rather than German has held steady for weeks, reflecting how nervousness around France's finances has not got worse, but it has also not lifted much.

Furthermore, the cost of insuring French five-year debt against the risk of default is trading above 40 bps, at its highest in at least a year, according to data from S&P Global Market Intelligence.

Italian 10-year yields IT10YT=RR were roughly flat at 3.838%, having grazed their highest since July on Monday as well, leaving their premium over Bunds a touch narrower at 121 bps.

Underscoring the spectre of a renewed push higher in consumer prices, European Central Bank policymaker Robert Holzmann said on Tuesday the ECB could not lower rates too quickly given issues including stubbornly high core inflation.

German two-year yields DE2YT=RR, which are more sensitive to shifts in rate expectations, were up 2.3 bps at 2.316%.

(Reporting by Greta Rosen Fondahn. Editing by Bernadette Baum and Mark Potter)

((Greta.RosenFondahn@thomsonreuters.com))