* Bond yields tumble as China lets yuan fall
* Dutch bond yield curve now negative
* Ireland 10-year yield briefly falls below 0%
* Some signs of life in Italy's ailing economy (Updates with U.S. data, UST price action)
By Virginia Furness
LONDON, Aug 5 (Reuters) - Dutch 30-year and Irish 10-year government bond yields turned negative for the first time on Monday as euro zone yields sank further amid an escalation of the U.S.-China trade and currency war and concerns about a no-deal Brexit.
China on Monday let its yuan fall beyond 7 per dollar for the first time in more than a decade, in a sign Beijing might be willing to tolerate further currency weakness as the trade dispute worsens.
The 1.4% drop in the yuan comes days after U.S. President Donald Trump surprised markets by saying he would impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, breaking a month-long trade truce.
Bond yields across the bloc extended Friday's declines.
Dutch 30-year government bond yields fell to a record low of -0.053%, taking the whole curve into negative territory for the first time.
In Germany, where the entire yield curve was below zero on Friday for the first time, yields fell further.
German 30-year bond yields hit a fresh record low at -0.066%. Ten-year Bund yields were down 2.5 bps at -0.52% .
"The CNY above 7 has triggered more risk off in global bonds which is why safe-haven bond yields have continued to fall," said Rainer Guntermann, rates strategist at Commerzbank.
Some analysts suggested the fall in yields also reflected a move by Chinese authorities to buy Bunds instead of U.S. Treasuries.
"There is speculation that the PBoC could intervene and buy bunds," said Rainer Guntermann, a rates strategist at Commerzbank. "If they were to slow the weakening of the CNY they would buy Treasuries, but in this situation they could switch towards Bunds."
Irish 10-year bond yields dipped into negative territory at -0.005% as investors shifted their focus from Brexit to more global concerns.
Irish 10-year bonds had underperformed the broader market towards the end of last month as the risk of a no-deal Brexit appeared to rise.
Long-dated bonds continued to outperform on Monday, and most other 30-year bond yields fell by five basis points, .
Weak data only reinforced the case for monetary easing from central banks, pushing U.S. and British bond yields lower too.
Growth in the U.S. services sector decelerated in July to its weakest level in three years, a private survey released on Monday showed.
Earlier, the euro zone composite final PMI, considered a good measure of overall economic health, dropped to 51.5 in July from June's 52.2, moving closer to the 50 mark separating growth from contraction.
The bond market rally did not exclude peripheral bond yields, which tend to rise in times of risk aversion.
Italy's and Spain's 30-year bond yields fell 3-4 bps each, despite political uncertainty in both countries., .
The latest services PMI were mixed. A more positive reading from Italy stood out in a gloomy picture overall.
Italy's economy may be set for a recovery in the next few months, two surveys suggested on Monday, giving the government some breathing space as it prepares a 2020 budget in the autumn.
(Reporting by Virginia Furness, additional reporting by Dhara Ranasinghe; editing by Larry King)