* Yields down in another quiet session
* Italian 10-year drop to new record low
* Euro zone periphery govt bond yields: http://tmsnrt.rs/2ii2Bqr
(Adds details, updates prices)
By Tommy Wilkes
LONDON, Oct 9 (Reuters) - Euro zone yields fell on Friday as
investors remained cautious, even though renewed hopes for a
U.S. stimulus package lifted sentiment in other markets.
Stocks rallied after U.S. President Donald Trump said on
Thursday talks with Congress had restarted on targeted fiscal
relief, after he had called off negotiations earlier this week.
Investors are also starting to bet that Joe Biden, Trump's
challenger in the Nov. 3 presidential election, will win,
potentially leading to a bigger stimulus package.
But bond markets were quiet, with yields dropping. Euro zone
yields have held to tight ranges in recent weeks and volatility
has been low, which analysts attribute to a wave of central bank
asset purchases that has crushed price action.
On Friday, the 10-year German bond yield slipped 2 basis
points to -0.536% while other core yields were a 1-2
bps lower .
Analysts said investor reluctance to dump government bonds
was a sign that momentum behind recent asset-price rallies was
Mizuho analysts said the resilience of the bond market was
"another sign that the momentum behind further risk-on is
"We expect rates to be bullish today with the possibility
for the 10Y Bund (10-year German bond), to break through its
recent resistance level," they wrote.
Yields in southern Europe also headed lower, with the
Italian 10-year hitting another record low. It was last at
0.676%, down 5 bps on the day.
(Editing by Mark Potter, Larry King)