German 30-year government bond yields hit highest since summer 2011

By Stefano Rebaudo

Aug 12 (Reuters) - German 30-year government bond yields rose to their highest level since 2011, driven by renewed investor focus on expectations of sharp increase in fiscal spending, while U.S. economic data released earlier came in roughly in line with forecasts.

"I don’t see a specific driver today, but the move in long-dated German yields isn’t surprising given the low volumes and the broader economic backdrop,” said Michiel Tukker, rate strategist at ING, citing the Dutch pension reform and expectations of increased issuance from Germany.

Germany's 30-year government bond yield was up 7 basis points (bps) at 3.2898%, its highest level since summer 2011.

Euro zone borrowing costs had held steady for most of the session after the United States and China rolled over a trade truce for 90 more days, as expected.

Policy-sensitive German two-year yields DE2YT=RR were up 0.5 bps at 1.97%, while German 10-year yields DE10YT=RR rose 5 bps to 2.74%.

Two-year U.S. Treasury yields fell on Tuesday after data showed that U.S. consumer price inflation was roughly in line with the expectations of economists in July, likely clearing the way for the Federal Reserve to cut interest rates in September.