German bonds rally as tariff fears drive investors to safe havens

LONDON, March 31 (Reuters) - German bonds rallied on Monday, sending benchmark yields to their lowest in almost a month, as investors flocked to the safety of government debt ahead of U.S. President Donald Trump's April 2 tariff deadline.

Trump has said he will announce reciprocal tariffs on U.S. trading partners on Wednesday, potentially overhauling the global trading system. Global equities and stock futures fell sharply .MIWD00000PUS on Monday and the Japanese yen JPY=EBS climbed as investors moved out of riskier assets into those deemed to be safe havens.

Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone bloc, fell 7 basis points (bps) to 2.659% in early trading, its lowest since March 5. Yields move inversely to prices.

Germany's two-year bond yield DE2YT=RR, which is sensitive to European Central Bank rate expectations, fell 5 bps to 1.982%, the lowest since mid-December.

Traders on Monday added to their bets on ECB rate cuts this year, money market pricing showed. They now expect the ECB's main rate to fall to 1.84% by year-end, down from 1.88% on Friday.

Trump said on Sunday that reciprocal tariffs will include all nations. He is also urging senior advisers to take a more aggressive stance on tariffs, the Washington Post reported on Saturday.

Separately, Trump over the weekend threatened secondary tariffs on Russian oil over his frustrations about the speed of talks on the Ukraine war.

Italy's 10-year yield IT10YT=RR, the benchmark for so-called periphery countries, fell 4 bps to 3.804%. The closely watched gap between Italian and German yields DE10IT10=RR widened slightly to 112 bps.