By Daniel Kruger 

U.S. government bond prices rose Tuesday as investors sought safer assets amid rising concerns about the pace of global economic growth.

The yield on the benchmark 10-year Treasury note fell the most in more than two weeks, settling at 2.732% from 2.783% Friday.

Yields, which fall as prices rise, declined after data Tuesday showed Chinese economic growth decelerated to the slowest pace since 1990, with a bruising trade fight with the U.S. exacerbating weakness in the world's second-largest economy.

A survey also showed a slippage in German economic sentiment, adding to worries that Europe's contributions to the world-wide expansion could diminish further.

Yields extended their decline later after the Financial Times said the Trump administration turned down an offer to hold preparatory trade talks with China, a report administration officials denied.

The slowdown in Chinese growth is important because many investors are concerned that diminished economic activity there has the potential to weigh on activity in Europe.

China's expansion has fueled demand from commodity exporters, and officials in the country have been trying to generate an environment conducive to stronger consumer spending.

Investors also said they are concerned that trade tensions could be exacerbated by U.S. officials' decision to extradite the finance chief of Huawei Technologies, Meng Wanzhou, on allegations that she defrauded banks about Huawei's business in Iran in violation of U.S. sanctions. She denies the charges.

There are "concerns that if the talks break down it's going to lead to a trade war," said Larry Milstein, head of Treasury and agency trading at R.W. Pressprich & Co.

Additional tariffs and the drag on the U.S. and Chinese economies would "have a significant negative impact on the global economic picture," he said.

Concerns about the outlook for the global economy dragged on stocks in Asian and European trading, fueling demand for the safety of government bonds, analysts said. Bond prices were also supported by comments by Fang Zinghai, vice chairman of the China Securities Regulatory Commission, who said he doesn't think China will significantly reduce its holdings of U.S. government debt.

While few analysts see much risk that China will sell its Treasury holdings, the comments could have been meant as a sign of goodwill.

Write to Daniel Kruger at Daniel.Kruger@wsj.com

 

(END) Dow Jones Newswires

January 22, 2019 17:22 ET (22:22 GMT)

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