CORRECTED-German yields fall for seventh session as bonds rally globally

LONDON, Feb 17 (Reuters) - Germany's benchmark bond yield fell for a seventh session on Tuesday as the safe haven asset benefited from some nervousness across markets around AI, spillovers from global peers and the chance of one more ECB rate cut later this year.

The 10-year German Bund yield, the benchmark for the euro zone, was down 2 basis points at 2.73%, around its lowest since early December, and down in each session since February 9. DE10YT=RR

It has been moving somewhat in sympathy with other markets in recent days and the 10-year U.S. Treasury yield dropped 3 bps to 4.02% on Tuesday, its lowest since late November, after U.S. markets were closed for the Presidents Day holiday on Monday. US10T=RR

Softer U.S. inflation data on Friday and worries about AI disruption in the stock market have been helping Treasuries. US/

Meanwhile, Japanese yields dropped sharply on Tuesday, extending their move after Prime Minister Sanae Takaichi's big election win earlier this month. British government bond yields were also lower after soft labour market data. GB/ JP/

And Tuesday's European data did little to shift the focus back to the euro zone. German investor morale fell unexpectedly in February. The ZEW economic research institute said, however, the assessment of the current economic situation continued to improve.

Some analysts think the recent rally in government bonds could be nearing its limit.

"Fundamentally speaking it would appear to us that the latest yield move has got too far ahead of itself," said analysts at DZ Bank in a note.

They think yields will grind higher in the coming months as euro zone countries continue to issue large amounts of bonds, the economies improve, and the European Central Bank sees no need to adjust rates any time soon.

Markets see the ECB as keeping rates steady across 2026, though they do see some chance of one further rate cut by year end. 0#EURIRPR

Late last year, market pricing reflected expectations that the ECB's next move would be a hike, but currently 40% is priced.

Other euro zone bonds were largely moving in line with the German benchmark. French 10-year yields were down 2 bps at 3.32% and Italian were down the same amount at 3.35%. FR10YT=RR, IT10YT=RR