Euro zone bond yields dip as investors weigh further tariff carve-outs

LONDON, April 15 (Reuters) - Euro zone bond yields dipped on Tuesday as investors mulled U.S. President Donald Trump’s suggestion that he might grant further sectoral carve-outs from tariffs, this time for automakers.

The U.S. removed smartphones and other electronics from its tariffs on China over the weekend, helping stocks rally on Monday and investors move back into bonds - such as U.S. Treasuries, British gilts and non-German euro zone debt - that had been hit by market nerves last week.

Speaking on Monday at the White House, Trump said he was considering a modification to the 25% tariffs imposed on foreign auto and auto parts imports from Mexico, Canada and other places.

Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone bloc, fell 2.1 basis points to 2.5%. Yields move inversely to prices.

German bond yields have fallen to around their lowest since early March as investors turned to them as a safe-haven as they sold U.S. assets, including normally bulletproof U.S. Treasuries.

Italy's 10-year yield IT10YT=RR was 1 bp lower at 3.67%, and the gap between Italian and German yields DE10IT10=RR stood at 116 bps.

Italian bond yields fell 13 bps on Monday after ratings agency S&P upgraded the country's long-term credit rating late on Friday.

Germany's two-year bond yield DE2YT=RR, which is sensitive to European Central Bank rate expectations, was little changed at 1.779%.