* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
LONDON, Aug 14 (Reuters) - Euro zone government bond yields rose on Friday, after three consecutive days of selling-off, with the benchmark German 10-year Bund yield having briefly touched a six-week high in early London trading.
Borrowing costs in Europe have tracked U.S. Treasuries this week, which have been driven to new highs by a deluge of debt issuance in the United States.
The sell-off of safe government debt is at odds with a broader risk-averse mood in global markets and is seen by analysts as a temporary correction resulting from uneven positioning.
"The market dynamics are becoming self-reinforcing with higher yields giving rise to higher yields," wrote Commerzbank strategists Christoph Rieger and Cem Keltek.
"These phases have occurred before, for instance in March when yields spiked, which amplified the sell-off in equities," they wrote.
"It is difficult to say, where or when the correction will end. We maintain a firm view, however, that this will be a temporary correction, and not a new trend," they added.
At 0730 GMT, the German 10-year Bund yield was at -0.417%, up less than one basis point on the day.
The yield has risen 10 bps so far this week - its biggest weekly increase since the first week of June.
Peripheral yields rose even further, so spreads widened. Italy's 10-year yield was up 2 bps at 1.101%, while the equivalent Spanish and Portuguese yields were also up 2 bps .
Deutsche Bank's global head of rates research, Francis Yared, said the move was not overdone and there was scope for the correction to continue.
But for the rise in rates to be sustained beyond a correction, there would need to be clear medical progress in curbing the COVID-19 pandemic, such as a vaccine, or a resolution in U.S. government negotiations on financial support to mitigate the impact of the coronavirus pandemic.
Asian shares slid overnight after Chinese retail sales unexpectedly fell in July, suggesting domestic demand is still struggling after the COVID-19 outbreak.
The U.S. government is still negotiating the terms of the next round of financial support to fight the pandemic.
U.S. President Donald Trump said he was holding up the coronavirus aid in order to block the Democrats' attempts to provide funding for the U.S. Postal Service.
The White House negotiating team of Treasury Secretary Steve Mnuchin and Chief of Staff Mark Meadows has not met with House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer for six days.
The next flashpoint for global market sentiment is expected to be a virtual meeting between top U.S. and China officials on Saturday, at which they will discuss their Phase 1 trade deal. (Reporting by Elizabeth Howcroft Editing by Mark Heinrich)