By Yoruk Bahceli
LONDON, Sept 10 (Reuters) - Germany's 30-year government bond yield rose briefly into positive territory on Tuesday for the first time in over a month, lifted by uncertainty over how much stimulus the ECB would add and expectations of a Sino-U.S. trade agreement.
Germany also kicks off its general budget debate in parliament and finance minister Olaf Scholz's speech will be carefully watched after Reuters reported Germany was considering creating a "shadow budget" to boost public investment above and beyond limits set by its national debt rules.
The 30-year yield rose as much as 4 basis points to 0.01% DE30YT=RR -- its highest level since early August, before returning to negative territory.
"Will it [the debt plan] rescue the euro zone from recession and low inflation? No. It's a welcome move but it would be too limited," said ING senior rates strategist Antoine Bouvet.
"It has pushed the market in a way that it was likely to go anyway. But the real story is expectations from the ECB and improvement in political sentiment," he added.
A return of the 30-year bond to a positive yield would mean the entire curve of the euro zone's benchmark bond issuer would no longer be in negative territory.
Global risk sentiment has been helped somewhat after U.S. Treasury Secretary Steven Mnuchin's comments on Monday that there was "a lot of progress" in trade talks with China and that Washington will seal an agreement if it "can get a good deal" in the coming weeks.
No-deal Brexit risks have also eased while Italy has managed to avert a snap election.
However in a reminder of the gloom facing the world economy, China's factory-gate prices shrank at the sharpest pace in three years in August, falling deeper into deflationary territory. That's pushed European stocks lower.
"For the moment the [bond] market is very much focused on the improvement in the trade tensions, but it is very theoretical at this stage, with officials talking out on the next round of talks rather than meaningful concessions being made," ING's Bouvet said.
"The improvement in sentiment is there but how long it will last is anybody's guess. Investors should be cautious."
In primary supply, the Netherlands will sell between 1 billion and 2 billion euros of bonds maturing in 2029 as an add-on to an existing bond.
(Reporting by Yoruk Bahceli Editing by Peter Graff)
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