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UPDATE 1-Pause over, Germany's 10-year bond yield hits new record low

Dhara Ranasinghe

* German, Spanish yields hits fresh record low

* Disappointing China economic data fuels growth fears

* Middle East uncertainty adds to safe-haven bid

* Euro zone periphery govt bond yields (Updates with China data, Bund yield, fresh quote)

LONDON, June 14 (Reuters) - Germany's 10-year bond yield reached a record low on Friday and Spanish yields dropped below 0.5% for the first time, as demand was boosted by weak Chinese data and heightened uncertainty in the Middle East after attacks on two oil tankers.

China's industrial output growth unexpectedly slowed in May to its lowest in more than 17 years. Investment also cooled, in the latest sign of weakening demand in the world's second-largest economy as the United States ramps up trade pressure.

The data is the latest sign of weakness in the global economy, raising pressure on central banks to take action -- The Swiss National Bank said on Thursday it might further relax its ultra-loose monetary policy.

"The Chinese data was disappointing, especially the industrial output numbers," said Chris Scicluna, head of economic research at Daiwa Capital Markets. "That's given bond markets additional momentum."

And in the euro zone, data showed French monthly inflation slowed more than expected in May, while Italian industrial orders fell in April.

Attacks on two oil tankers in the Gulf of Oman on Thursday that drove up oil prices and raised concerns about a new U.S.-Iranian confrontation added to the demand for safe-haven assets.

Germany's benchmark 10-year bond yield fell more than 2 basis points to minus 0.267%, a record low. It had paused in recent day after a relentless slide.

"What you've seen in the last few days is that even though we've had better risk appetite globally, (German) Bunds have not really sold off," said Alexander Aldinger, rates strategist at Bayern LB. "So, investors don't want to really challenge the current pricing right now."

Across the single-currency bloc, 10-year bond yields were 2 to 3 bps lower on the day, with French and Dutch long-dated bond yields also back within sight of recent lows .

Spain's 10-year bond yield touched a record low at 0.498% . It ended last year around 1.4%.

Demand for bonds has been highlighted in recent days by sales of peripheral government debt, which have benefited from so-called carry trades, where investors take advantage of low short-dated borrowing costs to invest in higher-yielding assets.

Iceland priced a new 500 million-euro, five-year bond on Thursday in a syndicated-bond deal that drew sizeable investor interest. (Reporting by Dhara Ranasinghe, editing by Larry King)