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UPDATE 2-Pause over, euro zone bond yields slide to new lows on weak China data

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* 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 http://tmsnrt.rs/2ii2Bqr (Updates with charts, move EZ inflation expectations)

By Dhara Ranasinghe

LONDON, June 14 (Reuters) - Germany's 10-year bond yield hit a record low on Friday and Spanish yields dropped below 0.5% for the first time, as weak data from China fanned concern about the impact of a bitter trade war and expectations of central bank rate cuts.

Heightened uncertainty in the Middle East after attacks on two oil tankers this week added to demand for safe-haven assets, with two-year bond yields in Germany falling to their lowest in almost a year.

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.

Euro zone money markets now fully price in a 10 bps rate cut from the European Central Bank within the next year.

"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."

Germany's benchmark 10-year bond yield fell more than 2.5 basis points to minus 0.27%, a record low. German 15-year bond yields also hit a new record low at minus 0.06% .

Euro zone bond yields had paused in recent days 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 3 to 6 bps lower on the day. French and Dutch long-dated bond yields fell back to within sight of recent lows .

Spain's 10-year bond yield touched a record low at 0.495% . It ended last year around 1.4%.

It has fallen for the past eight consecutive weeks and is set for its longest streak of weekly falls in almost 25 years, according to Refinitiv data.

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.

Italy has also benefited, with 10-year yields down 6 bps at 2.31% on Friday.

Elsewhere, a key market gauge of euro zone expectations tumbled 4.5 bps from Thursday's close to a new record low of 1.14% -- a worrying sign for the ECB, which targets inflation at close to 2%.

(Reporting by Dhara Ranasinghe, Additional reporting by Virginia Furness; Editing by Larry King and Raissa Kasolowsky)